The Federal Trade Commission on September 8, 2026, sued Humboldt Merchant Services in the US District Court for the Eastern District of Michigan and filed a settlement at the same time. Under the proposed order, Humboldt will pay $12 million for consumer redress and is permanently banned from boarding four categories of merchants. The company neither admits nor denies the allegations.
More than 1,000 shell accounts fronted for billing scams
Humboldt is the trade name of 5967 Ventures, based in Tempe, Arizona, with an affiliated office in Troy, Michigan. It is an independent sales organization (ISO) that specializes in payment acceptance for online gambling and adult entertainment, two sectors the card networks classify as high risk. The FTC alleges it processed payments for more than 1,000 sham merchant accounts: shell entities that served as fronts for unauthorized billing schemes. American Banker puts the volume processed from 2021 through 2023 at more than $100 million. The frauds included Legion Media, which the FTC shut down in 2024.
The warning came in 2015
An acquirer monitors each merchant’s chargeback rate because it carries the risk: if the merchant disappears, the acquirer refunds the cardholder. The ratio is calculated continuously and compared with network thresholds, and breaching them triggers monitoring programs that everyone in the industry knows.
That is what makes this case instructive: detection worked. American Banker reports that a consulting firm working for the sponsor bank flagged an abnormal concentration of disputes as early as 2015. In the first quarter of that year, Humboldt’s “Performance Marketing” business accounted for 25% of its processing volume and 66% of its chargeback volume. The problem accounts kept running until 2023.
Economics, not technology, explain the eight-year gap
Eight years separate a signal seen in 2015 from accounts closed in 2023. The reason is not technical. A merchant with a high chargeback rate is also a high-fee merchant: high-risk sectors pay more, and on paper that margin covers the cost of disputes. Closing a profitable account on the strength of a ratio takes a decision that profitability discourages.
- the acquirer measures the chargeback ratio, and it is also the party collecting the fees;
- network monitoring programs impose fines, not terminations;
- a merchant dropped by one acquirer finds another, often another high-risk specialist;
- and a shell company is cheap to replace, which spreads the ratio across fresh accounts.
That last point explains why a thousand accounts were opened rather than one. Spreading a fraudulent flow across many new accounts keeps each one below the thresholds that would trigger an alert. The technique is well known, and the ban targets it directly.
The ban is written by merchant category
The permanent ban is drafted as a list of merchant categories, and that drafting is the most useful part of the settlement for anyone who works in merchant acquiring.
| Category | What it covers |
|---|---|
| Straw companies | shell entities fronting for a third party |
| Merchants on Mastercard’s MATCH list | listed for excessive chargebacks, laundering, or fraud |
| Merchants subject to law enforcement action | those an authority has already pursued |
| E-commerce sites whose only address is a mailbox provider | that are new, have no processing history, or use negative option billing |
The second row deserves a second look. The MATCH list (Mastercard Alert to Control High-Risk Merchants), run by Mastercard , records merchants terminated by an acquirer for serious cause. It has existed for decades, any acquirer can query it, and checking it is already standard practice. The FTC is not asking for a new tool. It is turning a check that was left to commercial judgment into an obligation.
For the rest of the market, the lesson is organizational more than legal. The case describes a failure of consequence, not of detection. As long as the decision to close an account rests with whoever earns the fees on it, the signal can be perfect and still go unheeded for eight years.