Yesterday, the Federal Trade Commission (FTC) moved to dismiss its long-running enforcement action against Electronic Payment Solutions (EPS) pending in the District of Arizona after the Commission voted 4-0 to approve a final settlement with EPS and certain of its owners. The case against EPS, a third-party payment processor, is just the most recent example of the FTC’s heightened focus on holding financial intermediaries responsible for failing to police the actions of their merchant customers.
The FTC initially filed the federal action in 2017, requesting equitable monetary relief and injunctive relief under Section 13(b). After the Supreme Court issued its decision in AMG, the district court denied the FTC’s request for a permanent injunction and equitable monetary relief. The FTC then proceeded to file an administrative complaint against EPS, alleging unfair credit card laundering under Section 5 of the FTC Act and Assisting and Facilitating Telemarketing Sales Rule (TSR) violations.
The FTC and EPS entered into the proposed consent agreement on March 15, 2022, which the FTC finally approved last week. Though the consent agreement does not include any monetary relief in light of AMG, the conduct terms are quite rigorous and include (1) restrictions on the types of merchants for which EPS can process, (2) enhanced screening requirements for certain merchants, (3) additional monitoring requirements for certain merchants, and (4) monitoring and mandatory termination of independent sales agents.
Tomorrow, May 19, at 2:00 PM ET, we will be discussing the EPS settlement, as well as other recent government enforcement actions against payment processors and compliance tips during our webinar, “Payment Processors in the Regulatory Crosshairs: Updates on Regulatory Scrutiny and Best Practices for Compliance.” We hope you will join us to learn more about this topic. You can register to attend the webinar here.