Practice Area
Payment Processing in FTC Investigations
FTC investigations involving unauthorized charges, recurring billing, cancellation practices, or failures to provide promised refunds often require review of the merchant accounts the business used to accept customer payments and receive settlement proceeds. The FTC may examine the merchant application and underwriting file, transaction and refund data, chargebacks, customer complaints, and settlement records.
Those records can show what the business disclosed when the account was opened, how transactions were submitted and settled, and who made the relevant account decisions.
By the time the FTC contacts the business, the acquiring bank or PayFac may already be reviewing or restricting the merchant account. Settlements may be suspended, reserves increased, processing limits imposed, or the account terminated. Those actions can limit access to funds and account records while the business prepares its response.
Rome LLP handles the FTC response and any related dispute over merchant accounts, reserves, settlement funds, or access to payment records.
Received an FTC CID?
Civil Investigative Demands involving merchant accounts, transaction records, and payment activity.
Facing an FTC TRO, Asset Freeze, or Receiver?
Emergency enforcement actions involving frozen accounts, settlement funds, and payment records.
Reconstructing the Payment Structure
An FTC investigation may require the business to explain how its merchant accounts were set up and how transactions moved through them. The agency may examine which entity used each account, where the proceeds were settled, how transaction volume was distributed among accounts or acquiring relationships, and why the business used more than one relationship.
No single company may have the full account history. The merchant may hold order and refund records, while the ISO or PayFac has the application and account-management file. The acquiring bank may control underwriting and reserve decisions, and authorization or routing data may be maintained by the processor or gateway.
Those records may identify the same business under different legal names, merchant identification numbers, or account numbers. The response must match them to the correct entity and account before explaining how transactions were submitted and where the proceeds were settled.
Operational Problems and Regulatory Inferences
Payment data does not always explain why complaints or chargebacks increased. A fulfillment interruption or cancellation backlog may delay refunds. An account restriction may prevent the merchant from issuing credits or reaching the information needed to resolve customer complaints.
Changes in processing can also be characterized in different ways. The FTC may view movement across accounts as an attempt to avoid monitoring. The business may maintain that the change followed a reserve increase, volume limit, account restriction, or termination by an acquirer.
FTC staff may also compare merchant applications and chargeback responses with who actually owned and controlled the accounts and how transactions were routed. Differences concerning who controlled an account, what was disclosed during onboarding, or why volume moved among accounts may prompt separate questions.
The response should explain why the account activity changed and support that explanation with contemporaneous records.
Account Restrictions During the Investigation
An acquiring bank or PayFac may restrict the merchant account before the FTC contacts the business by suspending settlements, increasing reserves, imposing a volume cap, or terminating the relationship. It may also cut off portal access or request information about the investigation.
Those actions can deprive the business of operating funds and the records needed for its defense. Counsel may need to pursue access to transaction histories, settlement reports, reserve ledgers, and account communications while responding to the FTC.
Payment Companies Drawn into the Matter
An acquiring bank, PayFac, ISO, gateway, or sales agent may be drawn into an FTC matter even when it is not accused of wrongdoing. It may hold funds or records, receive a CID or subpoena, or be asked to explain a decision concerning the merchant account.
If the company becomes a subject or defendant, the inquiry may turn on what it knew about the merchant, what it controlled, and how it responded to chargebacks, monitoring alerts, or inconsistencies in the account file.
Separate Payment Disputes
An FTC investigation does not determine whether reserves may be held, fees deducted, account access restricted, or settlements suspended under the payment agreements. Those issues must be addressed separately with the company controlling the account or funds.
Rome LLP handles related payment disputes alongside the FTC defense when the issues overlap.
Contact Rome LLP
To discuss an FTC matter involving merchant accounts, payment records, reserves, or settlement funds.
