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FTC: Credit card processor assisted in scam

Posted by: Jane Friedmann under Businesses in hot water, Buyer beware, Scams, Whistleblower Updated: June 10, 2013 - 3:33 PM

A business that allegedly processed credit card transactions for scammers selling bogus debt relief services was sued by the Federal Trade Commission Wednesday.

Independent Resources Network Corp., a New York company also doing business as IRN Payment Systems, "knew or consciously avoided knowing" it was processing payments for an alleged telemarketing scam operated by Innovative Weath Builders, Inc., who was sued by the FTC in January.

IRN ignored the "alarmingly high chargeback rates" associated with Innovative Wealth, the agency said. The average chargeback rate in the U.S. is below one percent. A chargeback occurs when a cardholder disputes a charge and the charge is reversed.

The chargeback rate for transactions initiated by Innovative Weath averaged above 20 percent and exceeded 40 percent on occasion.

Innovative Weath immediately charged consumers between $500 and $2,000, but didn't make good on its promise of debt relief, the FTC wrote in a complaint.

"With the assistance of IRN, the IWB defendants vigorously contested credit card disputes initiated by dissatisfied customers," the complaint said.

The alleged scheme resulted "in millions of dollars of consumer harm and thousands of injured consumers," according to the complaint.

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