FTC Blocks Humboldt From High-Risk Merchants in $12 Million Settlement

The Federal Trade Commission has reached a $12 million settlement with payment processing company Humboldt Merchant Services, permanently barring it from handling payments for merchants deemed high-risk for fraud. The FTC accused Humboldt of processing payments for over 1,000 shell entities used as fronts by fraudulent companies involved in unauthorized billing scams.

FTC deputy director Katherine White emphasized the agency's commitment to holding companies accountable for supporting fraudulent businesses. Humboldt stated that the settlement pertains to its relationships with a limited number of third-party sales agents and merchants, primarily between 2021 and 2023 under previous leadership.

The company affirmed that it has strengthened its compliance and risk management programs since then, cooperating fully with the FTC and making no admission of wrongdoing. Humboldt aims to focus on supporting its growing merchant base with integrity, transparency, and excellent service. The FTC alleged that Humboldt knowingly processed payments for shell companies, opened sham accounts despite high chargeback rates, and attempted to boost transaction volumes through a lower-risk bank identification number.

The settlement requires Humboldt to pay $12 million for consumer redress and prohibits it from engaging in credit card laundering, processing payments for straw companies, merchants on the MATCH list, merchants subject to law enforcement actions, and eCommerce entities using third-party locations with negative option billing or no prior processing history.