The Federal Trade Commission charged global payment processor Nuvei with facilitating fraudulent merchant schemes it knew or should have known were deceptive, settling the case for $4.85 million and new compliance requirements, announced Sept. 4.
Nuvei agreed to the settlement and must implement enhanced merchant screening procedures to prevent future facilitation of consumer fraud, the FTC said. The action holds a payment infrastructure company responsible for enabling fraud rather than solely targeting the merchants running the deceptive schemes.
The case is significant because it extends legal liability up the financial services supply chain. Payment processors serve as the plumbing of digital commerce, moving money between consumers, merchants and banks. By charging Nuvei for knowingly processing transactions from fraudulent merchants, the FTC is signaling that infrastructure providers cannot ignore red flags.
For consumers, the case addresses a growing problem in e-commerce: fraudulent merchants who use legitimate payment processing to steal money from buyers. When payment processors fail to screen their merchant clients, consumers lose money to scams that could have been prevented through basic due diligence.
The FTC alleged that Nuvei continued providing services to merchants despite evidence of deceptive practices. The $4.85 million penalty and the required compliance enhancements are designed to change Nuvei’s business practices and deter other processors from similar conduct.
The settlement establishes a precedent that the FTC expects payment processors to conduct meaningful screening of their merchant clients and to act on evidence of fraud. Other payment processing companies may need to review their own merchant vetting procedures in light of the enforcement action.
Nuvei is a publicly traded company that processes payments for merchants across multiple countries and industries.