On June 1, 2020, FTC, the official protector of consumers, announced that Qualpay, a Calif.-based payment firm, has agreed to stop providing payment processing to the Business Coaching industry as part of a settlement for a charge.
The Federal Trade Commission had accused Qualpay of ignoring clear red flags that its client, MOBE Business Coaching, ran an illegal business coaching scheme.
In its complaint, the protector of consumers said that, for years, Qualpay went on processing payments for MOBE, a rip-off investment scheme that purportedly made clients pay millions of dollars for valueless products, even though it knew the business was a scam.
“Overlooking clear signs that their major consumer is a fraudulent business is no way to run a payment processing service,” said Andrew Smith, Head of the FTC’s Bureau of Consumer Protection. “And, it’s a sure way to provoke the commission’s attention.”
Some of the warning signs FTC mentioned in the complaint include;
- Concerns of whether MOBE was a local or global firm,
- The business model of MOBE
- MOBE’s background of high chargebacks,
- The deceptive language MOBE used in its marketing about guiding its clients to generate “hundreds of thousands of dollars per year.”
FTC also mentioned in the complaint that Qualpay acted out of its own policies by processing transactions for MOBE.
In particular, the payment firm did not scrutinize MOBE’s business model, which, according to the watchdog, would have exposed many indiscretions that might have led to its termination under Qualpay’s rules.
The inconsistencies began soon after Qualpay started processing payments for MOBE. Still, the former ignored warning signs such as the high number of transactions it processed and chargebacks associated with those transactions.
Furthermore, when chargeback levels hit the roof, Qualpay asked MOBE to control reverse charges by partnering with chargeback prevention firms.
FTC accuses Qualpay of failing to look into MOBE’s offerings even amid claims of excess chargeback.
‘We cannot monitor their business and have no idea what is going on,” one expert at Qualpay said.
FTC’s settlement now prohibits Qualpay from processing transactions for business coaching firms or other high-risk merchants for several reasons.
Author Bio:- Payment industry guru Taylor Cole is a passionate payments expert who understands how get the best merchant account. He also writes non-fiction, on subjects ranging from personal finance to stocks to cryptopay. He enjoys eating pie on his backyard porch, as should all right-thinking people.