Paddle.com and its U.S. subsidiary will pay $5 million to settle Federal Trade Commission (FTC) allegations that the company facilitated deceptive tech-support schemes that harmed many U.S. consumers, including older adults.
Paddle, a UK-based payment processor, offers payments, tax handling, compliance, and checkout infrastructure for software and digital product sellers by acting as a "merchant of record."
According to the FTC, Paddle failed to perform adequate screening and fraud prevention, enabling foreign operators like Restoro, Reimage, and PC Vark, to exploit the U.S. credit card system.
These schemes used fake virus alerts and pop-up warnings, often impersonating Microsoft or McAfee, to lure consumers into buying unneeded software or tech support services and charged them via unauthorized subscription renewals.
PC Vark sold scareware through deceptive alerts and routed victims to call centers. Paddle processed $12.5 million for PC Vark, despite numerous complaints and chargeback rates exceeding 7%.
Last year, Restoro and Reimage settled over allegations that it was involved in nearly identical scams that directed victims to phone-based upsells. Paddle processed over $37 million in transactions for them.
"From April 2020 to at least June 2023, Paddle processed over $37 million in credit and debit card charges for a pair of affiliated deceptive tech support software merchants, "Restoro Limited" and "Reimage Limited" (collectively, "Reimage"). These Reimage entities were registered in the Isle of Man and later re-domiciled in Cyprus," reads the FTC complaint.
The FTC complaint also alleges that internal Paddle communications showed that the company knew about the fraud, understood it disproportionately affected non-technical, older consumers, and deliberately concealed the activity to avoid scrutiny from banks and card networks.
To stay under chargeback thresholds and avoid detection, Paddle allegedly used chargeback prevention tools like Ethoca and Verifi to refund flagged transactions before they could be formally reported, masking accurate fraud rates.
Paddle also allowed merchants to begin charging U.S. consumers before completing "Know Your Customer" (KYC) checks, sometimes processing over $500,000 without providing any identification.
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