Regulators Cracked Down on a Company That Helped Fake Sellers Bill You

The scam: charges you never agreed to

The Federal Trade Commission just took action against a payment processing company called Humboldt Merchant Services. The FTC says Humboldt helped fake sellers charge people's credit cards without permission.

According to the FTC's complaint, Humboldt processed payments for more than 1,000 merchants that were shell companies. These were fronts for hidden businesses running unauthorized billing scams. One of them, Legion Media, was shut down by the FTC in 2024.

Under a proposed order, Humboldt will pay $12 million for consumer redress and be permanently banned from processing payments for merchants with a heightened risk of fraud.

How these bogus charges work

The pattern is simple and sneaky. A hidden company sets up a fake business account. Then charges start showing up on your card for things you never bought.

The FTC says these sham accounts had chargebacks (disputed charges) at rates almost 10 times higher than what credit card brands consider excessive. That is a huge warning sign that customers were fighting charges they never agreed to.

The FTC also says Humboldt tried to hide these accounts so more charges would slip through and get approved by your bank.

Red flags to watch on your statement

Check your card and bank statements every month. Look for small charges from names you do not recognize. Scammers often start small to see if you notice.

Watch for repeat charges, like a monthly fee you never signed up for. This is sometimes called negative option billing, where you get charged again and again unless you cancel.

Be careful with sellers whose only address is a mailbox at a UPS store or similar, especially brand new online sellers with no track record. The FTC named these as higher risk.

How to get your money back for free

You do not need to pay anyone to fix an unauthorized charge. It is free to dispute with your own bank or card company. Federal rules give you the right to challenge charges you did not authorize.

Call the number on the back of your card and ask to dispute the charge. Keep notes on dates and who you spoke with.

You can also report the scam to the FTC at ReportFraud.ftc.gov. That is free too. The FTC says it will never demand money, make threats, or promise you a prize.

Frequently asked questions

Do I have to pay someone to remove a fake charge?

No. Disputing an unauthorized charge with your bank or card company is free. Anyone who asks for a fee to fix a bogus charge should be avoided.

What should I do first if I see a charge I do not recognize?

Call the number on the back of your card and dispute it. Then ask the bank to block that merchant from charging you again.

Will I get money from the $12 million settlement?

The FTC set the $12 million for consumer redress, but details on who gets paid come later. There is nothing to buy and no fee to be part of any FTC redress. Watch ftc.gov for updates.

How do I report the scam?

Report it for free at ReportFraud.ftc.gov. The FTC uses these reports to spot and stop bad actors.