On December 22, the Federal Trade Commission announced a settlement of a pending lawsuit brought under the Telemarketing Sales Rule against participants in an alleged credit card "laundering" scheme. According to the FTC's complaint, PayBasics, Todd Hatch, and Jimmy Shin took an active role in helping the defendants behind the Tax Club fraud to open and maintain merchant accounts used to process credit card payments for sales made by a number of different third-party scammers. From 2010 to 2013, more than $1 million in payments from consumers' credit cards allegedly was laundered through the accounts that the defendants helped secure. The PayBasics defendants, at times, personally vouched for the shell companies behind the bogus merchant accounts, so that the merchant accounts would be approved, according to the complaint.
As part of the settlement, the PayBasics defendants must pay a monetary judgment of $1.02 million, and are prohibited from acting as a payment processor or contracting with a payment processor to provide payment processing services to a merchant. They also are prohibited from acting as sales agents for high-risk clients in need of payment processing.
"Our investigation didn't stop with the scammers who took people's money," said Jessica Rich, director of the FTC's Bureau of Consumer Protection. "We're also shutting down the operators who processed and hid their shady transactions."
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