Dive Brief:

• Canadian payments processor Nuvei has agreed to pay $4.85 million to settle a Federal Trade Commission complaint last week that alleged the company maintained payment processing accounts “for merchants that Defendants knew or should have known were engaged in unlawful practices.”
• As part of the settlement filed Friday, Montreal-based Nuvei agreed “to screen and monitor its existing and prospective clients,” including those in “certain merchant categories such as outbound telemarketing” and to impose “enhanced screening and investigation of any existing client,” with chargeback rates specified in the settlement, the FTC said in a press release on Friday.
• The commission filed its lawsuit Thursday in the U.S. District Court in Arizona, with the settlement agreement submitted the following day. Nuvei and four of its subsidiaries named as defendants did not admit or deny the FTC allegations. In an emailed statement Tuesday, Nuvei said it supports “the FTC's mission to protect consumers and are committed to robust compliance oversight. We cooperated fully throughout this process and are committed to transparency with our banking partners, card schemes, and regulators.” 

Dive Insight:

In its complaint, the FTC alleged that Nuvei and the other defendants violated the FTC Act with its payment processing and facilitated deceptive telemarketing, which violated the Telemarketing Sales Rule.

The FTC lawsuit highlighted Nuvei’s processing of consumer payments for a purported tech-support company called Reimage, handling more than $30 million in payment from 2017 to 2023.

Nuvei was alerted in 2020 by card network Visa that “Reimage was impersonating Microsoft with fake virus alerts and luring consumers to offshore call centers under the guise of offering remote tech support services,” according to the lawsuit. 

“Despite the fraud warning, which was accompanied by a fine, Defendants ramped up its payment processing for Reimage and its call centers and began processing recurring charges on Reimage’s tech support services and software,” the FTC alleged.

The agency also alleged that an Arizona-based Nuvei subsidiary, Nuvei Technologies, “opened and maintained merchant accounts for merchants allegedly selling business opportunities with false or baseless earnings claims such as DK Automation, merchants impersonating government tax authorities such as American Tax Service and merchants that other payment processors or acquiring banks previously terminated for excessive chargebacks or fraud.”

The FTC said it had taken previous enforcement actions against Reimagine, DK Automation and American Tax Service.   

As part of the FTC agreement, Nuvei will stop providing payment services “to any person selling tech support products or services by telemarketing or by pop-up messages relating to security or performance issues on a computer or other device,” according to the FTC’s press release. 

Nuvei is also prohibited “from making false or misleading statements to obtain merchant accounts and other payment processing services for itself or others, and engaging in any tactics to avoid fraud or risk monitoring programs established by banks or credit card networks.”

In its statement, Nuvei said that the settlement covered processing “with five former merchant accounts, representing less than 0.011% of transaction volume across our portfolio of more than 150,000 merchants.”

“Nuvei has strengthened its compliance framework in recent years, including enhanced merchant onboarding, chargeback monitoring, and ongoing merchant oversight,” the company said. “The obligations under the settlement are consistent with the direction of our existing program, and implementation is already underway.”

Nuvei processes more than 700 payment methods, supports about 150 currencies and acquires transactions in about 200 markets, according to the company’s website.

In June, Nuvei agreed to acquire cross-border payments firm Payoneer for $2.75 billion, and added several new senior executives the following month.