Payment processor Humboldt Merchant Services will pay $12 million and accept a permanent ban on processing payments for certain high-risk merchants to settle Federal Trade Commission allegations that it knowingly handled transactions for shell companies running unauthorized billing scams. The FTC announced the proposed order on Sept. 8, 2026, and filed it in federal court in Michigan. According to the agency, Humboldt processed payments for more than 1,000 sham merchants, including fronts tied to the Legion Media operation that the FTC shut down in 2024.
What the FTC Says Humboldt Did
Humboldt, the trade name of 5967 Ventures, LLC, is based in Troy, Michigan, and markets itself as a specialist in “tough to place” or “high risk” merchants that other processors often reject. The FTC’s announcement says the company opened and processed payments for merchants it knew, or consciously avoided knowing, were shell companies used by undisclosed third parties engaged in fraud.
The agency’s complaint says that from 2021 through 2023 alone, Humboldt processed over $100 million through these sham merchant accounts. The FTC also alleges the shell accounts typically ran up chargebacks at rates almost 10 times higher than what Mastercard and Visa treat as excessive, yet Humboldt kept opening them until around the end of 2023, after it learned of the FTC’s investigation.
“Humboldt was processing payments for companies despite red flags indicating they were scamming consumers,” said Katherine White, deputy director of the FTC’s Bureau of Consumer Protection. “This case underscores the FTC’s commitment to holding companies accountable for knowingly supporting fraudulent businesses.” The commission voted 2-0 to file the proposed order in the U.S. District Court for the Eastern District of Michigan.
The order of the first hour. The scams in this case turned a small shipping fee or a “free” trial into recurring card charges, and spotting that early means knowing which call to make first and what to write down. That sequence is laid out in the first-hour recovery plan in The Senior Fraud Defense & First-Hour Recovery Kit.
How the Billing Scams Reached Consumers’ Cards
According to the complaint, much of Humboldt’s most profitable business in 2017 and 2018 came from merchants selling nutritional supplements and gadgets online, often through “free” trial offers. Many consumers who entered card information for those offers were automatically enrolled in subscription plans that kept billing them for unwanted products after the trial ended. Humboldt called this line of business “Performance Marketing,” and the FTC says it helped lift the company’s annual profits from about $7.5 million in 2014 to more than $80 million in 2017.
The FTC says many of the shell entities were set up by an organization that a federal court shut down in December 2023 at the Justice Department’s request. One group that used such shells, the Legion Media defendants controlled by U.K. resident Harshil Topiwala, allegedly sent messages that appeared to come from well-known businesses and offered a supposedly free “gift” for a small shipping fee. After consumers paid, they were hit with recurring unauthorized charges. A federal court in Florida entered orders in September 2024 that permanently shut down those operations.
The complaint also alleges that at the end of 2020, Humboldt moved these accounts onto a lower-risk bank identification number, or BIN, used by an affiliated company, NorthAB, LLC. The FTC says the goal was to raise approval rates so that more attempted charges would be approved by cardholders’ banks.
The FTC says Humboldt had been warned. During reviews from 2017 to 2019, Mastercard alerted the company that thousands of its accounts appeared to be involved in “load balancing” and “card sharing,” in which fraudsters spread charges across many merchant accounts to stay below the card networks’ monitoring thresholds. In 2019, a senior Humboldt underwriter told management the company had for years opened shell accounts with straw signers, the complaint says. Most of those accounts came from a few outside sales agents, one of them a close personal friend of Humboldt’s president, who the FTC alleges profited through a secret arrangement to split the residual payments that agent received.
Where the $12 Million Goes and What the Order Bans
The stipulated order enters a $12 million judgment in favor of the FTC, payable within seven days after the court enters it. The FTC says the money is for consumer redress. Under the order, funds go into a relief fund administered by the commission or its designee, and any money not used for consumer relief or related purposes goes to the U.S. Treasury. The FTC has not yet announced a refund process, eligibility rules or a claim deadline, and the order allows the commission to use the money for other related relief if direct payments to consumers prove impracticable.
The order also prohibits Humboldt from credit card laundering and from processing payments for four categories of merchants: straw companies; merchants on the Mastercard Alert to Control High-Risk (MATCH) list for reasons such as excessive chargebacks, laundering or fraud; merchants that have faced law enforcement action; and e-commerce sellers whose only business address is a third-party mailbox provider such as a UPS Store and that use negative option billing, are new or lack processing history. Humboldt is also barred from supplying false information to obtain payment processing and from tactics used to evade fraud monitoring, including load balancing.
The FTC notes that stipulated final orders have the force of law once a district court judge approves and signs them.
Checking Statements for Charges Nobody Agreed To
The schemes described in the complaint depended on small, repeated charges that are easy to miss, a pattern that can hit retirees who pay bills on autopay or rarely review card statements line by line. The FTC recommends checking every statement promptly for unauthorized charges.
For credit cards, federal law gives consumers the right to dispute billing errors. The FTC’s guidance on disputing charges says a written dispute should reach the card issuer within 60 days after the first bill containing the error was sent, using the issuer’s address for billing inquiries. The issuer must acknowledge the complaint in writing within 30 days of receiving it unless the problem has already been resolved. Suspected scams can be reported at ReportFraud.ftc.gov. The agency also warns that it will never demand money, make threats or promise a prize.
When a Small Charge Turns Into a Monthly One
A refund from the Humboldt settlement may be months away, if it comes at all for a given cardholder. What matters sooner is catching a recurring charge, disputing it on time and keeping proof of every contact with the card issuer.
The Senior Fraud Defense & First-Hour Recovery Kit includes the first-hour recovery plan for the first calls after a suspicious charge, a fraud evidence and report log for dispute dates and reference numbers, and the free credit-freeze steps.
The full sequence is in The Senior Fraud Defense & First-Hour Recovery Kit.
This article was prepared with AI assistance and reviewed against the linked official sources.
