The Consumer Financial Protection Bureau yesterday announced a proposed settlement with a payment processing company and its founder that were both sued last year for allegedly knowingly processing payments on behalf of companies that were defrauding consumers, which will see the pair permanently banned from the debt collection industry, among others, while also imposing a fine of $500,000.
A copy of the proposed settlement in the case of CFPB v. BrightSpeed Solutions and Kevin Howard can be accessed by clicking here.
The defendants were accused of working with clients that purported to sell antivirus software and technical support services to older Americans, but instead scammed customers into purchasing unnecessary and expensive software and services that were as high as $2,000. The companies used fraudulent telemarketing schemes and received payments via remote checks that were processed by BrightSpeed. BrightSpeed and Howard continued to process checks even though they were allegedly aware of more than 1,000 complaints, inquiries from police departments, banks that had raised concerns, and chargeback rates that were higher than average. BrightSpeed allegedly processed $71 million of payments for more than 100 such companies.
Under the terms of the settlement, which must be approved by a District Court judge, the defendants will be barred from participating in a number of industries, including payment processing, consumer lending, deposit-taking, and financial-advisory services, while also being barred from engaging in debt collection and telemarketing activities with respect to consumer financial products or services. The defendants would also be required to pay a civil money penalty of $500,000.
“BrightSpeed and Kevin Howard profited by helping bad actors scam older adults,” said CFPB Director Rohit Chopra, in a statement. “We must do more to ensure our nation’s payments systems are not used to defraud older adults.”
