The Federal Trade Commission has announced a proposed settlement with Canadian company RevenueWire, Inc. and its CEO, Roberta Leach for alleged violations of the FTC Act and Telemarketing Sales Rule (TSR). The settlement requires them to pay $6.75 million to settle charges they laundered credit card payments for, and assisted and facilitated, two tech support scams previously sued by the FTC.

Call Stream Model

FTC filed its complaint and stipulated order for permanent injunction and monetary judgment yesterday in the US District Court for the District of Columbia. FTC alleges that RevenueWire (also doing business as “SafeCart”) played a key role in scamming consumers by using a business model named “Call Stream.” Under that model, RevenueWire provided lead generation, business development, payment processing, and money distribution services to numerous tech support fraudsters, leading to hundreds of millions of dollars of consumer injury. Leach signed the corresponding contracts, controlled RevenueWire’s operations, and claims to have invented the “Call Stream” business model.

RevenueWire’s Contracts

FTC claims that RevenueWire contracted with software sellers and call centers to provide them with payment processing services. RevenueWire also contracted with banks and payment processors in the US and abroad to open and maintain merchant accounts. The Call Stream model depended on a three-step process. First, the software seller (e.g. PC Cleaner) acted as the lead generator to funnel consumers to the call center. Second, the call center’s telemarketers deceptively upsold consumers tech support services (e.g. ICE and Vast). And third, RevenueWire used its merchant accounts to submit the software company and call center’s respective sales transactions for processing, and then divided the proceeds among itself, the software seller and the call center.

“SafeCart” Sales

RevenueWire’s payment processing services involved two credit card sales drafts. One generated by the transaction between the software companies and consumers when the consumers paid for the software online. And a second generated by the telemarketing transaction between the Call Stream partner call centers and consumers for purported tech support services. With either type of transaction, the name “SafeCart” would appear on consumers’ card statements.

Chase and WorldPay MIDs

The merchant accounts identified RevenueWire as the merchant of record selling “eBooks and software.”  Yet RevenueWire submitted the third-party sales transactions of the software sellers and call centers to Chase and WorldPay through these MIDs as though they were RevenueWire’s own sales transactions. RevenueWire also miscoded the transactions —e.g. coding them as software store sells (MCC 5734) instead of Teleservices (MCC 5967); and disguised renewal and rebill charges.

Settlement Terms

Under the terms of the proposed settlement, RevenueWire and Leach will be required to pay $6.75 million. In addition, they are permanently banned from any further payment laundering or violations of the TSR, and will be required to thoroughly screen and monitor high-risk clients to ensure those clients are not misleading consumers.

Bradley O. Cebeci is a Senior Attorney with Rome & Associates, APC. Brad focuses on Payments and Digital Marketing Law.