The Federal Trade Commission on Tuesday said First Data Merchant Services and a former executive agreed to pay $40.2 million to settle charges that they processed payments and laundered, or assisted in laundering, credit card transactions for scams that targeted hundreds of thousands of consumers,
First Data allegedly ignored repeated warnings from employees, banks and others that Chi “Vincent” Ko, through his company, which served as an independent sales agent for First Data, was laundering, and First Data was assisting and facilitating laundering, payments for companies that were breaking the law for several years.
Ko was later hired as an executive at First Data, the FTC said.
Ko, through his prior company, First Pay Solutions, opened hundreds of merchant accounts for at least four scams, the FTC said. Three were the subject of FTC actions and one was the subject of a U.S. Department of Justice criminal prosecution.
The FTC said that from 2012 to 2014, Ko opened accounts under false names, provided Wells Fargo Bank (WFC) - Get Report with deceptive information to open the accounts, and ignored evidence that his clients were engaged in fraud.
First Data allegedly ignored numerous warnings about Ko and First Pay’s activity.
The $40.2 million will be used to provide refunds to consumers harmed by these scams. Ko will be required to pay $270,373.70.
In settling with the agency, First Data and Ko neither admitted nor denied wrongdoing.
First Data said in a statement that "this agreed resolution, which relates to a single U.S.-based ISO within the wholesale channel, is in the best interest of First Data Merchant Services, our clients and their customers, and consumers."
"We remain committed to ensuring that our business partners and merchants operate with integrity, and our enhanced practices will enable us to continue to lead the industry in fraud prevention, and business and consumer protection," the company said.