FTC Takes Action Against BlueSnap and its Former CEO and Senior VP for Credit Card Laundering, Processing Payments for Known Scammer

The Federal Trade Commission is taking action against payment processing company BlueSnap, Inc., along with its former CEO Ralph Dangelmaier and senior vice president Terry Monteith, charging them with knowingly processing payments for deceptive and fraudulent companies. The defendants have agreed to a settlement that will require them to turn over $10 million for consumers and stop processing payments for certain high-risk clients.

In a federal court complaint, the FTC charged that BlueSnap and its officers processed millions of dollars in credit card payments for ACRO Services despite substantial evidence that the company was fraudulent. The FTC sued ACRO Services in November 2022.

"Companies like BlueSnap that knowingly process payments for scammers are breaking the law and making it easier to cheat consumers," said Samuel Levine, Director of the FTC's Bureau of Consumer Protection. "The FTC will continue cracking down on firms and their executives that break the law by facilitating fraud."

According to the complaint, BlueSnap, Dangelmaier and Monteith turned a blind eye to glaring warnings that ACRO Services was defrauding consumers from at least 2019 to 2021. The FTC says BlueSnap continued processing payments from consumers who were targeted by the scam and even advised ACRO Services on how to avoid fraud detection programs.

The warnings received by BlueSnap and its officers about ACRO were clear, according to the complaint. In 2019, BlueSnap was told by another payment processor to consider closing ACRO's accounts due to high rates of chargebacks from consumers, but it left them open. BlueSnap, the complaint charges, continued to process payments for ACRO for over a year even though reports from Visa repeatedly showed that between 29% and 40% of the company's charges were being disputed as fraudulent and even after American Express directly contacted Monteith asking her to close down ACRO's accounts.

In addition to external warnings about ACRO's fraudulent behavior, BlueSnap's own internal fraud monitoring team reported to both Dangelmaier and Monteith that ACRO was defrauding consumers and they still failed to act to shut down the company's accounts, according to the complaint. According to the FTC, Dangelmaier and Monteith provided advice to ACRO's owners on how to open new merchant accounts to evade fraud detection, and the BlueSnap officers funneled payments through those accounts until BlueSnap's processing partner ordered it to shut them down.

The complaint charges that BlueSnap processed payments for other companies accused of fraud including Powerline Group, which was the target of a law enforcement action by the New York Attorney General. The FTC's complaint notes that, as with ACRO, BlueSnap was aware of very high chargeback rates and continued to process the company's payments until it was forced to stop in 2021.

The proposed court order agreed to by the defendants will require them to turn over $10 million to the FTC to provide refunds to consumers. In addition, the settlement will prohibit the defendants from providing payment processing services to debt collection or debt relief companies, as well as companies listed through an industry fraud monitoring program. In addition, the company will be required to closely screen and monitor other high-risk clients and be prohibited from helping any client take steps to evade fraud monitoring.

The Commission vote authorizing the staff to file the complaint and proposed stipulated final order was 5-0. The FTC filed the complaint and final order in the U.S. District Court for the Northern District of Georgia.

NOTE: The Commission files a complaint when it has "reason to believe" that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. Stipulated final injunctions/orders have the force of law when approved and signed by the District Court judge.

The staff attorneys on this matter are Margaret Burgess, Alan Bakowski, and Natalya Rice of the FTC's Southeast Region.

Public link

Please use the above public link if you want to share this noodl on another website.