Settlement in Credit Card Interest Rate Scam

A payment processing company agreed to pay or relinquish $1.1 million to settle Federal Trade Commission charges that it knowingly helped facilitate a credit card interest rate reduction scam that bilked tens of thousands of consumers out of nearly $10 million.

Independant Resources Network Corp., doing business as IRN Payment Systems, agreed to a $3.48 million settlement, which is suspended upon payment of $400,000. IRN also released any claim to approximately $700,000 in reserve funds that the court previously ordered it to turn over under the asset freeze provisions of a preliminary injunction order that was entered before IRN was named as a defendant in the case.

The FTC filed a complaint in January 2013 to stop a telemarketing scam operated by Innovative Wealth Builders, Inc. (IWB) and its principals, who falsely promised consumers they could reduce the interest rates on their credit cards and save them thousands of dollars on their debts. For most of the time that IWB operated its scam, IRN was its exclusive payment processor.

In June 2013, the FTC sued IRN in an amended complaint alleging that IRN facilitated IWB’s scheme when IRN knew, or consciously avoided knowing, key facts about the illegal conduct of IWB’s telemarketing scam in violation of the Telemarketing Sales Rule, and chose to continue profiting from processing IWB’s credit card transactions.

Payment processors enable merchants to charge consumers’ credit cards for products and services, and in exchange are paid for each payment transaction the merchant processes.

The stipulated order prohibits IRN from the following: payment processing for clients that sell any debt relief product or service; payment processing for certain clients engaged in certain types of businesses (such as collection agency, credit card protection service, lead source providers, mortgage loan modification or outbound telemarketing) without conducting reasonable upfront screening and ongoing monitoring; and assisting or facilitating any client they know, or should know, is making misrepresentations to consumers or engaged in unauthorized billing of consumer accounts.