The Federal Trade Commission filed a proposed order on September 8, 2026, in the U.S. District Court for the Eastern District of Michigan that would require Humboldt Merchant Services to pay $12 million and permanently stop the company from processing payments for the riskiest categories of merchants. The order is not yet in force. A district court judge still has to review and sign it before it carries the weight of law, which is why the FTC describes the payment amount in future tense rather than as money already collected. The case centers on a processor the agency says knowingly serviced more than 1,000 shell merchant accounts tied to consumer billing scams, and on the specific screening gaps regulators say let those accounts keep running.
A Proposed Order, Not Yet a Final One
The Commission voted 2-0 to approve the filing, and the FTC’s Bureau of Consumer Protection built the case around allegations that Humboldt opened and processed payments for merchants it knew, or consciously avoided knowing, were shell companies fronting for undisclosed third parties engaged in fraud. Deputy Bureau Director Katherine White said the action reflects the FTC’s position that a processor cannot claim ignorance when the warning signs are visible in its own account data, framing the case as a test of how much responsibility a processor bears for the merchants it agrees to service.
What the stipulated order does not yet do is bind Humboldt to anything. The FTC’s own release notes that stipulated final orders and injunctions carry the force of law only once a district court judge has approved and signed them, and no signing date has been set. Until that happens, the $12 million payment and the permanent processing ban exist only on paper, negotiated between the agency and the company but not yet enforceable against it.
That distinction matters for how the case should be read this week. The FTC and Humboldt reached the terms of a settlement, not a verdict imposed after trial, and the filing in the Eastern District of Michigan is the mechanism for turning that negotiated agreement into an enforceable court order rather than the end point of the dispute. Settlements of this kind typically move to signature within weeks once filed, though the court sets its own calendar.
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More Than 1,000 Shell Merchant Accounts and a Bank ID Switch
According to the FTC’s complaint, Humboldt processed payments for more than 1,000 merchants that functioned as shell entities, serving as fronts or pass-throughs for fraudulent companies running unauthorized billing schemes. One of those downstream operations was Legion Media, a company the FTC had already shut down and ordered to turn over its assets in 2024 for running unauthorized billing and credit card laundering schemes of its own.
The complaint alleges the accounts carried an obvious warning sign: chargeback rates that ran almost ten times higher than the level credit card brands view as excessive. Chargebacks are the mechanism by which cardholders dispute a charge with their bank, and a rate that far above industry norms is the kind of pattern payment processors are expected to investigate rather than continue servicing without question.
Instead, the FTC says Humboldt tried to keep the volume flowing by moving the sham accounts onto a lower-risk bank identification number, or BIN, licensed to an affiliated entity. Reassigning accounts to a different BIN can change how a transaction is scored by the banks that ultimately approve or decline it, and the complaint alleges the switch was intended to improve the odds that flagged transactions would still clear rather than be blocked at the point of sale.
A Permanent Ban on Four Categories of High-Risk Merchants
The proposed order would bar Humboldt from processing for four specific categories going forward: straw companies used to disguise a merchant’s real owner; merchants placed on Mastercard’s Alert to Control High-Risk, or MATCH, list for excessive chargebacks, laundering or fraud; merchants that have already been subject to a law enforcement action; and e-commerce entities that use negative-option billing, lack a processing history, and list only a third-party mailbox provider such as a UPS Store as their business address.
Beyond the merchant-category ban, the order would also prohibit Humboldt from engaging in or assisting credit card laundering, from providing or helping others provide false or misleading information to obtain payment processing, and from using tactics such as load balancing to spread transaction volume across multiple accounts specifically to evade fraud and risk monitoring systems built to catch exactly this pattern.
Those provisions describe the exact mechanics regulators say Humboldt used to keep servicing accounts other processors would have dropped. Naming the MATCH list, the law-enforcement-flagged category, and the mailbox-only e-commerce profile as off-limits going forward suggests the agency built the order around the specific gaps in screening that let the shell accounts operate for as long as they did, rather than around a general instruction to be more careful.
Whether that ban takes hold on the timeline the FTC wants still depends on the Eastern District of Michigan court, which has not indicated when a judge will rule on the filing. Until a judge signs it, Humboldt remains free to continue operating under its existing practices, and the $12 million in consumer redress the FTC negotiated stays uncollected. The Legion Media case already showed what unauthorized billing routed through a shell merchant account looks like on a consumer’s statement, and this filing is the FTC’s attempt to close the processing pipeline that let it happen at scale rather than punishing a single downstream scheme after the fact.
This article was produced with AI assistance and reviewed by The Money Overview editorial team.
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