The Federal Trade Commission (FTC) on December 9, 2020, settled with Complete Merchant Solutions, LLC (CMS) and its former CEO, Jack Wilson, requiring them to pay $1.5 million, refrain from processing payments for certain merchants and enact enhanced client screening protocols.
The FTC alleged that CMS and Wilson facilitated fraud by processing consumer credit card payments from organizations that they knew or should have known were schemes designed to defraud customers.
The FTC identified in a Stipulated Order several red flags of illegal conduct they charged CMS and Wilson with ignoring, including excessive customer chargeback rates, sham chargeback reduction plans, artificial reduction of customer chargeback rates through use of multiple merchant accounts, and processing payments through merchant accounts without approval from the bank holding the account.
In addition to the $1.5 million payment, the settlement order specifically enjoins CMS and Wilson from processing payments for clients that offer free trials of nutraceuticals, or dietary supplements. It further requires screening of new clients to determine whether their practices are deceptive or unfair and outlines specific information that must be gathered and included in the screening process. Finally, the order requires CMS and Wilson to monitor existing clients for signs of deceptive or unfair practices and imposes enhanced monitoring requirements for clients who automatically charge customers for nutraceutical products.