FTC Says Payment Processor Helped 1,000+ Sham Merchants Charge Consumers — $12 Million Settlement Proposed

The FTC alleges Humboldt Merchant Services processed payments for more than 1,000 sham merchants, highlighting why consumers should investigate unfamiliar charges on their credit and debit card statements. Andrey_Popov/Shutterstock

A company doesn’t have to be the one directly charging your credit card to play a role in an alleged billing scam. The Federal Trade Commission announced a proposed $12 million settlement with payment processor Humboldt Merchant Services after accusing the company of knowingly facilitating payment processing for fraudulent businesses. The FTC alleges Humboldt processed transactions for more than 1,000 merchants that were actually shell entities used as fronts or pass-throughs for businesses engaged in unauthorized billing schemes. If approved by a federal judge, the settlement would also permanently prevent Humboldt from processing payments for several categories of merchants considered particularly vulnerable to fraud.

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