$10 Million: When a Payment Processor Knew Its Client Was a Scam and Kept the Accounts Open Anyway

Payment processing company BlueSnap, Inc., along with its former CEO Ralph Dangelmaier and senior vice president Terry Monteith, have agreed to pay $10 million and stop processing payments for certain high-risk clients to settle Federal Trade Commission charges that they knowingly processed payments for deceptive and fraudulent companies.DOCUMENTED

The FTC's complaint alleges BlueSnap and its officers processed millions of dollars in credit card payments for ACRO Services, a company the agency had already sued in November 2022 for running a deceptive telemarketing scheme selling bogus debt-relief services under names including Tri Star Consumer Group and Thacker & Associates International.DOCUMENTED

Warnings that went unheeded

"Companies like BlueSnap that knowingly process payments for scammers are breaking the law and making it easier to cheat consumers," said Samuel Levine, then-Director of the FTC's Bureau of Consumer Protection, announcing the settlement.DOCUMENTED According to the complaint, BlueSnap and its officers turned a blind eye to glaring warnings that ACRO Services was defrauding consumers from at least 2019 to 2021.DOCUMENTED

The warnings were not subtle, the FTC alleges. In 2019, BlueSnap was told by another payment processor to consider closing ACRO's accounts due to high rates of customer chargebacks, but left the accounts open.DOCUMENTED BlueSnap continued to process payments for ACRO for over a year even as reports from Visa repeatedly showed that between 29 percent and 40 percent of the company's charges were being disputed by cardholders as fraudulent — chargeback rates far above what payment networks typically consider a sign of legitimate business activity.DOCUMENTED American Express directly contacted Monteith, asking that ACRO's accounts be shut down, but according to the complaint, BlueSnap continued processing the company's payments regardless.DOCUMENTED

Advising a scammer on evading detection

Beyond simply continuing to process payments despite warnings, the FTC's complaint alleges Dangelmaier and Monteith advised ACRO Services on how to evade fraud-detection programs, enabling the company's allegedly illegal billing practices to continue through new merchant accounts even as its existing ones drew scrutiny.DOCUMENTED That allegation — active advice on avoiding detection, rather than merely passive inaction in the face of warning signs — moves the case beyond ordinary negligence and toward a claim that BlueSnap's own executives understood exactly what ACRO was doing and helped the scheme continue.REVIEWED

The complaint charges that BlueSnap also processed payments for other companies accused of fraud, including Powerline Group, which was separately targeted by a New York Attorney General law enforcement action — with the FTC alleging a similar pattern of known high chargeback rates that BlueSnap continued to process despite the warning signs, until its processing partners eventually forced a shutdown in 2021.DOCUMENTED

Visa reports repeatedly showed between 29 and 40 percent of one client's charges were disputed as fraudulent — a level BlueSnap allegedly kept processing through for more than a year.

What the settlement requires

Under the settlement, BlueSnap, Dangelmaier, and Monteith agreed to turn over $10 million for consumer redress and to stop processing payments for debt collection or debt relief companies, as well as for any company listed in a fraud-monitoring program going forward.DOCUMENTED Holding individual executives personally accountable — not just the corporate entity — reflects a broader shift the FTC has emphasized in recent enforcement actions, on the theory that corporate settlements alone may not deter individual decision-makers who can simply move to a new company after a corporate-level penalty.REVIEWED

Why payment processors sit at a critical chokepoint

Accepting credit and debit cards is the lifeblood of most legitimate businesses, and payment processors like BlueSnap serve as the essential intermediary connecting merchants to the banks and card networks that make electronic payment possible.REVIEWED That gatekeeping position means a processor's willingness to keep a high-risk merchant's accounts open, despite mounting fraud signals, can directly determine whether a fraudulent scheme is able to continue collecting money from victims — making processor accountability a distinct and important enforcement lever separate from pursuing the underlying fraudulent merchant alone.REVIEWED

The underlying ACRO Services scheme

The company whose payments BlueSnap allegedly kept processing, ACRO Services, had itself been the target of a separate 2022 FTC enforcement action alleging it ran a deceptive telemarketing operation selling bogus debt-relief services under a rotating set of consumer-friendly-sounding names, including American Consumer Rights Organization and Consumer Protection Resources — names chosen, the FTC's earlier complaint alleged, to sound official or affiliated with genuine consumer-advocacy work despite having no such connection.REVIEWED In that earlier case, a trial court froze ACRO's assets, appointed a receiver, and ultimately enjoined the company from further violations of the FTC Act and the Telemarketing Sales Rule.REVIEWED

The BlueSnap case effectively asks a follow-up question the ACRO enforcement action alone could not answer: how was a scheme with fraud-dispute rates as high as 40 percent able to keep accepting credit card payments for as long as it did? The FTC's complaint against BlueSnap supplies part of the answer — a payment processor that, according to the agency, chose continued revenue over acting on repeated, specific warnings from card networks and its own industry peers.REVIEWED

The size of the settlement — $10 million, split between corporate and personal liability for Dangelmaier and Monteith — reflects the FTC's effort to make individual accountability, not just corporate penalties, a meaningful deterrent in payment-processing fraud-facilitation cases. Executives who move between payment-processing companies over the course of a career carry institutional knowledge of exactly which chargeback thresholds and monitoring-program listings tend to trigger genuine scrutiny; a settlement that reaches those individuals personally, rather than only the corporate entity that employed them at the time, aims to make that knowledge less useful for evading detection at a future employer.REVIEWED

Have documents relevant to this story? Reach us through our tips channel.