Last month, the FTC announced a $1,384,500 settlement with Michael Abdelmesseh and KMA Merchant Services, LLC in a lawsuit regarding a deceptive credit card laundering scheme. The FTC alleged that the defendants telemarketed fraudulent business opportunities to consumers that involved false promises of thousands of dollars in income as commission for loans made to small businesses referred by those consumers in violation of Section 5 of the FTC Act and the Telemarketing Sales Rule.  The settlement requires the defendants to stop payment processing or acting as an independent sales organization or sales agent, engaging in credit card laundering, and disclosing, using, or benefitting from previously obtained consumer information.  They must also destroy consumer information within thirty days of FTC direction to do so, obtain order acknowledgments, and engage in compliance reporting, monitoring, and recordkeeping.

Takeaway: As part of the agency’s effort to protect consumers and small businesses, the FTC is dedicated to uncovering the often many layers of credit laundering schemes and will order the destruction of improperly obtained consumer information in the process.