BrightSpeed Solutions, a third-party payment processor, and its founder, Kevin Howard, came under scrutiny when the Consumer Financial Protection Bureau (CFPB) filed a lawsuit against them for processing payments on behalf of fraudulent tech-support and antivirus companies. These client companies targeted older adults, charging high fees for unnecessary software. In response, the CFPB secured a settlement that includes a $53 million compensation fund to be distributed to affected consumers, marking a significant case in consumer protection and fraud prevention.
Allegations and the CFPB Lawsuit
The CFPB alleged that BrightSpeed and Howard facilitated fraudulent transactions by processing remotely created checks (RCCs) for over 100 client companies between 2016 and 2018. These companies, claiming to offer antivirus software and tech-support services, exploited consumers—often older individuals—charging up to $2,000 for services that were either unnecessary or freely available. BrightSpeed continued processing payments despite a high rate of complaints and warnings from banks and authorities, ultimately leading the CFPB to allege violations under the Consumer Financial Protection Act and the Telemarketing Sales Rule.
Settlement and Ban from Financial Services
BrightSpeed and Howard ceased operations in 2019, but the CFPB’s enforcement action concluded in a 2022 settlement that permanently bans them from payment processing and other consumer financial services. The court ordered BrightSpeed to pay a civil penalty of $500,000 and established a fund to reimburse victims. As of July 2024, the CFPB began distributing the $53 million to 122,507 affected consumers, with each refund reflecting their losses from BrightSpeed’s fraudulent clients.
Consumer Implications and Broader Impact
This case underscores the potential vulnerabilities in the payment processing industry, particularly for older consumers who may be less aware of tech-support scams. By taking enforcement action, the CFPB highlighted the need for accountability in financial services and safeguards against deceptive practices, particularly as payment processors may unwittingly support fraudulent activities without robust oversight.
Conclusion
The BrightSpeed lawsuit represents a win for consumer protection advocates and sets a precedent for increased scrutiny of payment processors. The CFPB’s actions serve as a reminder that companies engaged in financial services must prioritize transparency and responsibility to protect consumers from fraudulent practices.
