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First Data agrees $40m FTC settlement

First Data agrees $40m FTC settlement

First Data Merchant Services and one of its former executives will pay more than $40.2 million to settle US charges that they knowingly processed payments and laundered, or assisted laundering of, credit card transactions for scams that targeted hundreds of thousands of consumers.

According to a Federal Trade Commission (FTC) complaint, First Data (now part of Fiserv) ignored repeated warnings from employees, banks, and others that Chi 'Vincent' Ko, through his company that served as an independent sales agent (ISO) for First Data, was laundering.

Ko, through his prior company, First Pay Solutions, opened hundreds of merchant accounts for at least four scams, says the FTC. He is accused of opening accounts under false names, providing Wells Fargo with deceptive information to open the accounts, and ignoring evidence that his clients were engaged in fraud.

Meanwhile, First Data ignored warnings about Ko, including emails from a Wells Fargo executive. The firm later hired him as an executive.

First Data will pay $40 million to settle the charges, with Ko paying about $270,000. The money will be used to refund customers harmed by the scams.

"First Data is paying $40 million because it repeatedly looked the other way while its payment processing services were being used to commit fraud," says Daniel Kaufman, deputy director of the FTC’s Bureau of Consumer Protection. "When companies fail to screen out fraudsters exploiting the payment processing system to steal people’s money, they’re breaking the law - and injuring consumers."

Says First Data: "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."

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