FTC settles with payment processor, sets 'knowledge standard' for Section 5 liability

The FTC announced a settlement with a payment processor and four affiliated entities, alleging the companies knowingly enabled deceptive merchants, including foreign tech-support operations, to access the U.S. card-payment system in violation of the FTC Act and the Telemarketing Sales Rule. The settlement includes a $4.85 million monetary judgment. Separately, FTC Chairman Andrew Ferguson and Commissioner Mark Meador issued a joint statement articulating a knowledge standard for unfair payment-processing claims that includes actual knowledge, constructive knowledge, and conscious avoidance. The allegations have not been proven in court beyond the settlement terms.

Why it matters. The articulated knowledge standard could shape both future FTC enforcement and private claims against payment processors accused of facilitating deceptive merchant conduct.