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Third Party Payment Processor Banned for Allegedly Helping Telemarketing Scammers Reach into Consumers’ Bank Accounts

  • Ohio AG Dave Yost and the Federal Trade Commission (“FTC”) reached a settlement with payment processor Madera Merchant Services, LLC, a related entity, and related individuals (collectively “Madera”) to resolve allegations brought by the state of Ohio and the FTC that Madera processed payments for multiple scams in violation of the FTC Act and Telemarketing Sales Rule and Ohio’s Consumer Sales Practices Act.
  • The complaint alleged that Madera used remotely created payment orders and checks (“RCPOs”) to draw money from consumers’ bank accounts, including processing millions of dollars for telemarketing scams involving promises of student debt reduction and credit card interest reduction, even though the Telemarketing Sales Rule prohibits the use of RCPOs for telemarketing sales.
  • Under the terms of the stipulated order, Madera is subject to a judgment of more than $8.6 million, which is partially suspended because of Madera’s inability to pay, on the condition that Madera forfeit the contents of several bank accounts, along with personal assets of the related individuals. Madera is also permanently banned from any payment processing activities.