On January 17, the Federal Trade Commission announced a settlement of allegations against a Latvian payment processor and its former CEO that they enabled a deceptive “free trial” offer scheme that billed United States consumers the full price for certain products and engaged in various tactics amounting to “credit card laundering.”
According to the FTC’s 2018 complaint, Apex Capital Group, LLC, its principals, and related entities marketed supposed “free trial” offers for personal care products and dietary supplements online, but, instead, billed consumers the full price of the products and enrolled them in negative option continuity plans without their consent. The Apex Capital defendants apparently used dozens of shell companies and straw owners to further their scheme.
In May 2019, the FTC filed an amended complaint adding the Latvian financial institution SIA Transact Pro and its former CEO, Mark Moskvins, to the case. Those new defendants were alleged to have illegally maintained merchant accounts for the Apex Capital scheme in the name of shell companies, and enabled the Apex Capital defendants’ efforts to evade credit card chargeback monitoring programs.
“Transact Pro helped scammers drain people’s accounts without their permission,” said Andrew Smith, Director of the Bureau of Consumer Protection. “The FTC will continue to aggressively pursue payment processors that are complicit in illegal conduct, whether they operate at home or abroad.”
In September 2019, the Apex Capital defendants agreed to cease the allegedly illegal conduct and surrender assets valued at between $3 million and $6 million.
The final order resolves the FTC’s charges against the Transact Pro defendants. It also bans them from certain types of payment processing, or assisting others in payment processing. It also imposes a $3.5 million judgment against the Transact Pro defendants, which the FTC anticipates using to provide refunds to defrauded consumers.
The FTC filed the proposed order in the United States District Court for the Central District of California, and it has now been entered by the court. A copy of the final order can be found here.