CFPB Sues Payment Processor

CFPB Sues Intercept Corporation

After mounting complaints from both banks and consumers about unauthorized withdrawals and other illicit activities, the accused payment processor is being taken to court.

The Consumer Financial Protection Bureau (CFPB) announced on Monday (June 6) that it filed a lawsuit against Intercept Corporation and two of its executives, Bryan Smith and Craig Dresser, for the alleged illegal acts.

According to a CFPB press release, the lawsuit claims that Intercept ignored signs that its clients were breaking laws and introducing potential fraud. The bureau said the intention of its lawsuit is to provide customer relief and impose penalties, as well as shut down unlawful practices by Intercept, Smith and Dresser.

"Intercept and its executives, Bryan Smith and Craig Dresser, ignored clear signs of brazen fraud, including illegal withdrawals from consumer accounts, and need to clean up their act,” CFPB Director Richard Cordray said. “Companies cannot turn a blind eye to wrongdoing when they process payments from consumer banking accounts on behalf of clients that are breaking the law.”

Intercept is a payment processor based in North Dakota that is responsible for transmitting electronic funds transfers through the ACH on behalf of its clients, typically for transactions, like payroll deposits, and loan and bill payments.

Intercept, Smith and Dresser are being accused of violating the Dodd-Frank Wall Street Reform and Consumer Protection Act by ignoring red flags during payment processing that led to some of its clients partaking in unlawful behavior and deceiving customers.

The CFPB alleges that Intercept, Smith and Dresser also “played a key role in this unlawful conduct by giving these clients access to the banking system and the means to extract money from consumers’ bank accounts.”

It’s estimated that the accused helped their clients to steal millions of dollars via unauthorized and other illegal charges from consumer accounts.

“If banks raised concerns about consumer complaints against an Intercept client, Intercept would simply seek out a new bank to help it process payments for the same clients,” the release stated. “Intercept skipped among eight different banks between 2008 and 2014.”



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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