The Federal Trade Commission has confirmed that Allied Wallet helped perpetrators to defraud more than $110m from consumers in scams, pyramid schemes and unlawful debt collection operations.
Allied Wallet settles $110 million FTC fraud case
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Allied Wallet settled without admitting or denying the allegations. According to the FTC’s complaint, Allied Wallet knowingly processed payments for dubious merchants, and even helped create fake shell companies and dummy websites to hide fraud from banks and the credit card networks.
A phantom debt collector which threatened people over debts they did not owe, for instance, pretended to be a variety of merchants selling “blankets, housewares, paint supplies and hiking equipment”, the FTC alleged.
Allied Wallet procured UK shell companies to disguise the location of non-EU merchants, the FTC said, which “enabled US merchants to evade the generally stricter regulatory framework of the US financial system”.
Allied Wallet facilitated payments for merchants and used Wirecard as one of its acquirers, in a business relationship lasting from 2013 to 2018. Wirecard said it was only one of Allied Wallet’s many processing partners, and that appropriate measures “were taken when noticing any irregularities or suspicious transaction patterns, including termination of merchant accounts and reporting to law enforcement authorities”.
The FTC alleged that the US and UK operations of Allied Wallet had processed fraudulent payments since at least 2012. The FTC complaint said “dummy websites Allied submitted to its foreign acquirers on behalf of its merchant clients were non-functional, with no active payment page, contained static images, and appeared to be created from a template website”.
Under the terms of the settlement with the FTC, Allied Wallet is prohibited from processing payments for certain types of merchant and subject to stringent screening and monitoring requirements on payment processing.
A $110 million monetary judgement was also imposed, which will be suspended due to inability to pay once the company’s owner surrenders his California home. In a statement on the settlement, Allied Wallet said it would “move forward with new company wide improvements . . . to continue protecting consumers online”.
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