The Federal Trade Commission (FTC) reached settlements with Nuvei and Humboldt Merchant Services totaling $16.85 million. Nuvei is required to pay $4.85 million, while Humboldt must pay $12 million for consumer redress.
The FTC alleged that Nuvei maintained accounts for merchants engaged in deceptive practices. Humboldt was accused of processing payments for over 1,000 shell merchants used as fronts for unauthorized billing, often utilizing lower-risk bank identification numbers.
Following the court order, Nuvei must implement enhanced screening for prospective merchants, including collecting data on principals, owners, and physical locations. The company is required to review five months of chargeback data and six months of processing statements.
Nuvei must now calculate chargeback rates monthly for all clients. If a client exceeds a 1% monthly chargeback rate and 75 chargebacks in any two of the preceding six months, the company must initiate an investigation.
Research from PYMNTS Intelligence indicates that 57% of firms in payment-heavy industries reported an increase in fraud attempts last year. Consequently, 65% of executives plan to strengthen identity verification processes over the next 12 months.
