Facts

CardFlex Inc. is a payment processor, which helps businesses obtain accounts to process debit and credit card transactions. The Federal Trade Commission sued CardFlex and Andrew M. Phillips, as an officer of Cardflex, alleging that CardFlex engaged in an unfair act or practice by providing payment processing services to a group of companies that the FTC had earlier sued.

PLAINTIFF'S CONTENTIONS:
The FTC alleged that CardFlex knew or should have known that the businesses in question were engaged in illegal conduct and that CardFlex's opening and maintaining merchant accounts for these companies allowed the companies to impose $26 million in improper charges on consumers' cards for membership and other programs.

Result

Defendants settled with the FTC, and were permanently restrained and enjoined from engaging in prohibited conduct. They were also ordered to engage in reasonable screening and monitoring of prospective high risk clients. Furthermore, a monetary judgment in the amount of $3,298,298.13 was entered against CardFlex Inc. and Phillips.