WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau (CFPB) filed a proposed final judgement and order with a federal district court that, if entered by the court, would resolve a March 2021 lawsuit brought by the CFPB against BrightSpeed Solutions, a privately-owned, third-party payment processor, and its founder Kevin Howard. The CFPB alleges that between 2016 and 2018, BrightSpeed and Howard knowingly assisted companies profiting from fraudulent services and products. BrightSpeed and Howard processed payments for companies that claimed to offer technical-support services and products to consumers over the internet, but in reality, the companies tricked consumers into purchasing expensive and unnecessary antivirus software or services.
Many of the targeted consumers were older adults unaware of clickbait scams and that the software and services they purchased were actually available for free. If entered by the court, the order would require BrightSpeed and Howard to pay a civil penalty of $500,000 and permanently bar them from multiple consumer financial products and services industries.
“BrightSpeed and Kevin Howard profited by helping bad actors scam older adults,” said CFPB Director Rohit Chopra. “We must do more to ensure our nation’s payments systems are not used to defraud older adults.”
Chicago-based BrightSpeed was a privately owned, third-party payment processor founded in 2015 and operated by Howard. BrightSpeed ceased operations in March 2019. From 2016 to 2018, BrightSpeed and Howard processed remotely created check payments for more than 100 client companies totaling more than $70 million. A remotely created check payment is often produced by a payee or its service provider and drawn from a consumer’s bank account. The check often is authorized by the consumer remotely, over the telephone or the internet, and it does not require the consumer’s handwritten signature.
The CFPB alleges that many of BrightSpeed’s client companies purported to provide antivirus software and technical-support services to consumers, particularly older adults, but they instead scammed consumers into purchasing unnecessary and expensive computer software and services for amounts as high as $2,000. The client companies allegedly sold their products and services through fraudulent telemarketing schemes and received payments through remotely created checks processed by BrightSpeed. Specifically, the CFPB alleges that BrightSpeed and Howard harmed consumers by:
- Continuing to process payments for fraudulent services: BrightSpeed and Howard continued to process the scammers’ remotely created check payments for months and, in some cases, years. BrightSpeed and Howard did so despite being aware of nearly 1,000 consumer complaints, several inquiries from police departments around the country, two banks raising concerns about their client companies, and payment return rates averaging more than 20% (a common return rate standard is 15%).
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB has the authority to act against institutions that violate federal consumer financial laws, including those that engage in unfair, deceptive, or abusive acts or practices. The proposed settlement, if entered by the court, would require BrightSpeed and Howard to:
- Permanently get out of multiple consumer financial industries: Both BrightSpeed and Howard would be permanently barred from the payment processing, consumer lending, deposit-taking, and financial-advisory services. They would also be permanently barred from engaging in debt collection and telemarketing activities with respect to consumer financial products or services.
- Pay a Civil Penalty: Under the terms of the proposed order, Howard would be required to pay a $500,000 civil money penalty to the CFPB, which would be deposited into the CFPB’s Civil Penalty Fund.
Older adults are particularly vulnerable to financial scams. Resources to protect older adults from fraud and financial exploitation are available on the CFPB’s website.
The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive. For more information, visit consumerfinance.gov.