[Federal Register Volume 87, Number 58 (Friday, March 25, 2022)]
[Notices]
[Pages 17089-17091]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-06306]


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FEDERAL TRADE COMMISSION

[File No. X170045]


Electronic Payment Systems, LLC; Analysis of Proposed Consent 
Order To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement; request for comment.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair or deceptive acts or 
practices. The attached Analysis of Proposed Consent Order to Aid 
Public Comment describes both the allegations in the complaint and the 
terms of the consent order--embodied in the consent agreement--that 
would settle these allegations.

DATES: Comments must be received on or before April 25, 2022.

[[Page 17090]]


ADDRESSES: Interested parties may file comments online or on paper by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Please write ``Electronic 
Payment Systems, LLC; File No. X170045'' on your comment, and file your 
comment online at https://www.regulations.gov by following the 
instructions on the web-based form. If you prefer to file your comment 
on paper, mail your comment to the following address: Federal Trade 
Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Suite 
CC-5610 (Annex D), Washington, DC 20580, or deliver your comment to the 
following address: Federal Trade Commission, Office of the Secretary, 
Constitution Center, 400 7th Street SW, 5th Floor, Suite 5610 (Annex 
D), Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT: Jody Goodman (202-326-3096), Bureau of 
Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue 
NW, Washington, DC 20580.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34, 
notice is hereby given that the above-captioned consent agreement 
containing a consent order to cease and desist, having been filed with 
and accepted, subject to final approval, by the Commission, has been 
placed on the public record for a period of thirty (30) days. The 
following Analysis to Aid Public Comment describes the terms of the 
consent agreement and the allegations in the complaint. An electronic 
copy of the full text of the consent agreement package can be obtained 
at https://www.ftc.gov/news-events/commission-actions.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before April 25, 2022. 
Write ``Electronic Payment Systems, LLC; File No. X170045'' on your 
comment. Your comment--including your name and your state--will be 
placed on the public record of this proceeding, including, to the 
extent practicable, on the https://www.regulations.gov website.
    Due to the COVID-19 pandemic and the agency's heightened security 
screening, postal mail addressed to the Commission will be subject to 
delay. We strongly encourage you to submit your comments online through 
the https://www.regulations.gov website.
    If you prefer to file your comment on paper, write ``Electronic 
Payment Systems, LLC; File No. X170045'' on your comment and on the 
envelope, and mail your comment to the following address: Federal Trade 
Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Suite 
CC-5610 (Annex D), Washington, DC 20580. If possible, submit your paper 
comment to the Commission by overnight service.
    Because your comment will be placed on the publicly accessible 
website at https://www.regulations.gov, you are solely responsible for 
making sure your comment does not include any sensitive or confidential 
information. In particular, your comment should not include sensitive 
personal information, such as your or anyone else's Social Security 
number; date of birth; driver's license number or other state 
identification number, or foreign country equivalent; passport number; 
financial account number; or credit or debit card number. You are also 
solely responsible for making sure your comment does not include 
sensitive health information, such as medical records or other 
individually identifiable health information. In addition, your comment 
should not include any ``trade secret or any commercial or financial 
information which . . . is privileged or confidential''--as provided by 
Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 
16 CFR 4.10(a)(2)--including in particular competitively sensitive 
information such as costs, sales statistics, inventories, formulas, 
patterns, devices, manufacturing processes, or customer names.
    Comments containing material for which confidential treatment is 
requested must be filed in paper form, must be clearly labeled 
``Confidential,'' and must comply with FTC Rule 4.9(c). In particular, 
the written request for confidential treatment that accompanies the 
comment must include the factual and legal basis for the request and 
must identify the specific portions of the comment to be withheld from 
the public record. See FTC Rule 4.9(c). Your comment will be kept 
confidential only if the General Counsel grants your request in 
accordance with the law and the public interest. Once your comment has 
been posted on the https://www.regulations.gov website--as legally 
required by FTC Rule 4.9(b)--we cannot redact or remove your comment 
from that website, unless you submit a confidentiality request that 
meets the requirements for such treatment under FTC Rule 4.9(c), and 
the General Counsel grants that request.
    Visit the FTC website at http://www.ftc.gov to read this document 
and the news release describing the proposed settlement. The FTC Act 
and other laws that the Commission administers permit the collection of 
public comments to consider and use in this proceeding, as appropriate. 
The Commission will consider all timely and responsive public comments 
that it receives on or before April 25, 2022. For information on the 
Commission's privacy policy, including routine uses permitted by the 
Privacy Act, see https://www.ftc.gov/site-information/privacy-policy.

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission (``FTC'' or ``Commission'') has 
accepted, subject to final approval, an agreement containing a consent 
order from Electronic Payment Systems, LLC, also d/b/a EPS, Electronic 
Payment Transfer, LLC, also d/b/a EPS, John Dorsey, and Thomas McCann 
(``EPS'').
    The Commission has placed the proposed Order on the public record 
for thirty days for receipt of comments by interested persons. Comments 
received during this period will become part of the public record. 
After thirty days, the Commission will again review the agreement and 
the comments received, and will decide whether it should withdraw from 
the agreement and take appropriate action or make final the agreement's 
proposed Order.
    Respondent Electronic Payment Systems, LLC is an independent sales 
organization (``ISO'') that serves as an intermediary between merchants 
seeking to open credit card merchant accounts and its acquiring bank, 
which is the bank that has access to the credit card networks. John 
Dorsey and Thomas McCann are officers and the owners of EPS.
    The Commission's proposed Complaint alleges that, in 2012 and 2013, 
EPS served as the ISO for the entities involved in a deceptive 
telemarketing scam called Money Now Funding (``MNF'' or ``MNF scam''). 
The FTC sued MNF in 2013 for telemarketing worthless business 
opportunities to consumers and falsely promising that consumers would 
earn thousands of dollars in income. The principals of the MNF scam 
went to great lengths to hide their identities behind many phony 
businesses. In order to charge consumers' credit cards but make it 
difficult to trace the money back to MNF, MNF engaged in a credit card 
laundering scheme whereby its principals and employees created numerous 
fictitious companies. Those fictitious companies, through a sales 
agent, submitted applications for merchant accounts to EPS. With 
knowledge of the misconduct, EPS then opened merchant accounts in the 
names

[[Page 17091]]

of these fictitious companies, and victim credit card charges were 
processed through those accounts, rather than through a single merchant 
account in the name of MNF. With similar knowledge, EPS engaged in the 
underwriting and approval of MNF's fictitious companies and submitted 
merchant account applications for these fictitious companies to its 
acquirer. Using the services of two payment processors, EPS enabled 
more than $4.6 million in MNF transactions to be processed through 
these and other fraudulent merchant accounts.
    The Commission's proposed Complaint alleges that EPS's conduct 
regarding the MNF fictitious companies and their merchant accounts 
constituted an unfair act or practice under Section 5 of the FTC Act 
and assistance and facilitation of illegal credit card laundering under 
Section 310.3(b) of the Telemarketing Sales Rule, 16 CFR 310.3(b); see 
also Sec.  310.3(c) (banning credit card laundering).
    The proposed Order contains provisions designed to prevent EPS from 
engaging in the same or similar acts or practices in the future. 
Section I of the proposed Order contains prohibitions against engaging 
in credit card laundering; engaging in tactics to evade fraud 
monitoring or risk monitoring programs; providing payment processing 
services to any merchant that is engaged in any act or practice that 
is, or is likely to be, deceptive or unfair; and providing payment 
processing services to, or acting as an ISO for, any merchant that is 
listed on the MasterCard Member Alert to Control High-Risk Merchants 
(MATCH) list for several enumerated reasons.
    Section II imposes screening requirements that EPS must implement 
when it screens applications from prospective merchants that fall under 
the definition of ``Additional Review Merchants.'' The definition of 
Additional Review Merchant includes categories of EPS merchants that 
have been the subject of FTC cases: Merchants who engage in outbound 
telemarketing and merchants selling specific services (debt collection, 
debt relief, credit-related services, rental housing listings, job 
listings, or ``Money Making Opportunities,'' as defined in the order). 
Heightened screening of Additional Review Merchants includes obtaining 
detailed information about the merchant's business, as laid out in the 
order. EPS would also be required to take reasonable steps to verify 
the accuracy of the due diligence information it obtains.
    Section III requires increased monitoring of Additional Review 
Merchants. The order requires EPS to investigate merchants whose 
chargeback rate exceeds 1% and whose total number of chargebacks 
exceeds 55 per month in two of the preceding six months. Section IV 
requires monitoring of sales agents and termination of sales agents who 
are engaged in tactics to conceal credit card laundering.
    Sections V through IX are reporting and compliance provisions that 
allow the Commission to better monitor EPS's ongoing compliance with 
the Order. Under Section IX, the Order will expire in twenty years, 
with certain exceptions.
    The purpose of this analysis is to aid public comment on the 
proposed Order. It is not intended to constitute an official 
interpretation of the Complaint or proposed Order, or to modify in any 
way the proposed Order's terms.

    By direction of the Commission.
April J. Tabor,
Secretary.
[FR Doc. 2022-06306 Filed 3-24-22; 8:45 am]
BILLING CODE 6750-01-P