U.K.-based payment processor Paddle.com Market Limited and its subsidiary, Paddle.com, Inc., have agreed to pay $5 million and will be permanently banned from processing payments for tech-support telemarketers. This decision comes as part of a settlement with the Federal Trade Commission (FTC) over allegations that Paddle abused the U.S. credit-card system and facilitated deceptive foreign operators in accessing it, leading to consumer losses amounting to millions of dollars.
The FTC's complaint against Paddle alleged that the company processed payments for deceptive tech-support schemes targeting U.S. consumers, including older adults. Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection, stated: “Paddle provided foreign-based tech-support schemes with access to the U.S. payment system, allowing these companies to harm consumers.” He added that “the FTC will hold accountable payment companies that knowingly facilitate payments for scammers or look the other way when faced with red flags about their clients’ conduct.”
The charges outlined in the complaint include claims that Paddle opened merchant accounts under false pretenses and used them to process card payments for unrelated third-party merchants. Additionally, Paddle was accused of enabling overseas schemes to exploit the credit card system while evading detection by banks and card networks. One such scheme facilitated by Paddle allegedly involved Restoro-Reimage using fake virus alerts and pop-up messages impersonating brands like Microsoft or McAfee.
As part of its role as a "merchant of record," Paddle was also charged with billing consumers for automatically renewing subscriptions without clear disclosure of recurring charges.
The FTC accused Paddle of violating several regulations, including the FTC Act, Telemarketing Sales Rule, and Restore Online Shoppers’ Confidence Act. In March 2024, Restoro-Reimage settled related charges with a $26 million payment.
Under the proposed settlement order, Paddle is:
- Permanently prohibited from processing payments for tech-support merchants involved in telemarketing or using pop-up messages regarding computer security or performance.
- Barred from assisting deceptive merchants or employing tactics to circumvent fraud-monitoring programs.
- Required to implement effective client screening and monitoring while providing periodic reports on merchant-client transactions.
- Obliged to clearly disclose subscription terms, obtain express informed consent from consumers for subscriptions, and offer an easy cancellation method.
The $5 million settlement payment by Paddle will aid in compensating consumers affected by the Restoro-Reimage scheme.
The Commission vote authorizing staff to file the complaint was unanimous at 3-0. Chairman Andrew N. Ferguson issued a statement supported by Commissioners Melissa Holyoak and Mark R. Meador. The complaint and proposed settlement order were filed in the U.S. District Court for the District of Columbia.
The FTC notes that filing a complaint occurs when there is "reason to believe" defendants are violating laws and when action appears beneficial for public interest.
FTC staff attorneys Sung W. Kim and Russell Deitch handled this case within the Bureau of Consumer Protection.
The Federal Trade Commission aims to promote competition while protecting consumer interests through education efforts. Consumers can learn more about various topics at consumer.ftc.gov or report issues at ReportFraud.ftc.gov.
