In processing credit card payments for India-based tech support provider Tech Live Connect and additional foreign clients engaging in telemarketing fraud through tech support scams, the Nexway group of companies, Iezuitov and Potenzone violated both the FTC Act and the Telemarketing Sales Rule, the DOJ said in the release.

The court granted a total monetary judgment of $49.5 million, but the DOJ said that will be suspended with the $650,000 payment. The DOJ declined to comment Tuesday on why the larger amount was suspended, although the FTC noted in its release the defendants’ inability to pay full amounts in part led to the suspension of total judgment.

Scams targeting U.S. consumers and those outside the U.S. involved a Nexway client floating a deceiving pop-up notification on a consumers’ computer screen, warning of virus detection. Or a Nexway client would freeze a consumer’s screen and share a number to call for assistance, the DOJ said.

Consumers connected to call centers in India were duped into paying for phony repairs to their computers, the DOJ said. Those credit card payments were processed by Nexway, which had set up its clients’ merchant accounts for the processing of credit card transactions and received a commission for each charge, according to the DOJ.

The payment processor and its executives worked with Tech Live Connect and other clients scamming customers “despite knowing or consciously avoiding knowing that they were engaged in fraudulent telemarketing and other deceptive practices,” the DOJ contended. 

The complaint filed by the DOJ notes Nexway received many complaints about Tech Live Connect charges, including chargebacks and inquiries from card giants Visa and Mastercard.

Nexway processed tens of millions of dollars tied to these tech support scams, and its “premium tech support” clients made up a quarter of Nexway’s business between 2016 and 2020, the FTC said in a separate Monday release.

The DOJ also alleged Nexway engaged in credit card laundering because it allowed its clients to use Nexway’s credit card merchant accounts for the scam charges despite Nexway not being the merchant in those transactions. 

“Companies like Nexway that knowingly launder charges for scammers are breaking the law and helping scammers cheat money from consumers,” said Director Samuel Levine of the FTC’s Bureau of Consumer Protection, in the DOJ release. 

Nexway and other defendants named in the complaint agreed to court orders “that prohibit them from any further payment laundering and require them to closely monitor other high-risk clients for illegal activity,” the FTC said in its release. 

By Caitlin Mullen on April 19, 2023
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