Paddle.com Market Limited, a payment processor based in the U.K., and Paddle.com, Inc., its subsidiary, will pay a total of $5 million, and are permanently barred from processing payments on behalf of tech-support telemarketers. The settlement resolves a Federal Trade Commission complaint that Paddle had abused the U.S. Credit-Card system by allowing deceptive foreign operators access to it. This cost consumers millions of dollars.
In a , , the FTC claimed that Paddle and Paddle’s subsidiary processed payments in deceptive tech support schemes targeting U.S. customers including older adults.
Christopher Mufarrige said that Paddle gave foreign tech-support schemes access to the U.S. Payment System, which allowed these companies to harm the consumers. The FTC will hold payment companies accountable that knowingly facilitate scammers’ payments or ignore red flags regarding their clients’ behavior.
The complaint alleges that:
- Paddle, a software reseller or “merchant of records,” opened merchant accounts and used them to process payments for a number of unrelated third party merchants.
- Paddle enabled overseas schemes that accessed the credit card system to collect payments from U.S. customers and to avoid detection by merchant banks or card networks.
- Paddle-facilitated schemes like Restoro Reimage allegedly used fake viruses alerts and pop up messages to impersonate well-known brands such as Microsoft or McAfee.
- Paddle, as the “merchant-of-record,” charged consumers for automatic renewals of subscriptions without revealing that they would be subject to recurring charges.
The FTC claimed Paddle violated three laws: the FTC Act and Telemarketing Sales Rule. They also alleged Paddle had violated the Restore Online Shoppers’ Confidence Act. Paddle’s client Restoro Reimage paid $26 millions to settle FTC charges that it violated the Telemarketing Sales Rule and the FTC Act in March 2024.
The Paddle is the settlement order .
- The merchants are permanently prohibited from accepting payments for any tech-support merchants who engage in telemarketing, or pop-up messages that concern computer performance or security.
- It is prohibited to assist deceptive merchants, or engage in any tactic designed to avoid fraud.
- Paddle requires that merchants provide regular reports about their transactions and to Paddle’s payment service providers.
- The company must clearly and conspicuously explain the terms and conditions of every subscription that it processes. It also needs to obtain the informed consent of the consumer and offer a way for the consumer to cancel the subscription and avoid recurring charges.
The compensation for Restoro Reimage consumers who were harmed will be supplemented by the $5 million Paddle must pay under the settlement.
The Commission voted 3-0 to authorize staff to file the complaints. Andrew N. Ferguson, along with Melissa Holyoak and Mark R. Meador , issued a. The FTC filed a complaint and proposed settlement in the U.S. District Court of the District of Columbia.
NOTE The Commission files a formal complaint when there is “reasonable belief” that the named defendants have violated or are about the violate the law, and the Commission believes that an action in the public’s interest would be justified.
Sung W. Kim, Russell Deitch and the Bureau of Consumer Protection of FTC are the FTC staff attorneys in this case.
