Payment Processing & Finance Law

Overview

The intersection of finance and technology has revolutionized the payment processing industry, resulting in the rapid growth of both innovative services like peer-to peer-lending, crowdsourcing, eBanking and ePayments, and the need for attorneys experienced in this area. Ifrah Law’s attorneys fill that need by representing businesses, individuals, and in payment processing relationships, including online gaming merchants in disputes with payment processors, ISOs and acquiring banks, MATCH and Terminated Merchant File listings, and payment processing agreements.

On behalf of a wide variety of domestic and international banking and payment processing entities, Ifrah Law has a strong track record for trying and winning cases. They have also succeeded in concluding cases with private litigants, the Department of Justice, the Consumer Financial Protection Bureau (CFPB), the Federal Trade Commission (FTC), the Securities Exchange Commission (SEC), and the Commodities Futures Trading Commission (CFTC).

The History of Federal eCommerce Law

Over the past several years, lawmakers have instituted a number of changes in federal law regarding online payment services and how these technologies are regulated. One of the first major pieces of legislation to address this modern shift in banking and payment process was Congress passing the 1999 Gramm-Leach-Bliley Act, more commonly referred to as the Financial Services Modernization Act.

This Act represented the first federal level attempt to govern how financial institutions should treat sensitive customer information by keeping it confidential and secure—specifically, information acquired through online credit card transactions where a physical card was not present at the point of sale. It also established restrictions on when financial institutions could share nonpublic customer information, required companies to disclose to customers what their privacy practices are, and mandated that customers be given the option to opt out of their information being distributed to certain third parties.

Numerous updates to federal payment processing law have been implemented since then, the most significant of which is arguably the set of “Red Flag Rules” established by the Federal Trade Commission in 2007. These rules require any organization that receives or processes payments online to determine what red flags could indicate identity theft or fraud and set up a comprehensive system to address and correct problems when those issues pop up.

The Role of the Payment Card Industry Security Standards Council

In addition to the actions taken by federal lawmakers and regulatory agencies, a lot of standard security practices in the payment processing industry have been established and maintained by major industry participants. In fact, the Payment Card Industry Security Standards Council—made up of representatives from several giant companies such as Visa and Discover—generally takes the lead in drafting and enforcing electronic payment safety standards on an international basis, rather than the federal government.

While violations of the Data Security Standards put in place by this Council cannot directly result in criminal prosecution, they can still create serious consequences for anyone in the payment chain between consumer and financial institution, including independent retailers who fail to adhere to the recommendations. A qualified attorney from Ifrah Law could provide guidance to any company or individual seller looking to better understand these guidelines and ensure their own compliance with them.

What the Future Could Have in Store for Online Banking

Unfortunately, both the federal government and the Payment Card Industry Security Standards Council are still playing catch-up to the new frontier of eCommerce. While advances in credit card technology, such as chip readers, have helped cut down on in-person fraud, preventing online fraud and identity theft is often a matter of logistical expertise rather than technical know-how. Furthermore, the rapid expansion and proliferation of digital cryptocurrency—as well as other forms of blockchain-based payment processing—shows promise for revolutionizing the industry over the next few years, potentially leading to a lot more illicit activity online.

Since the growth of online banking and commerce is virtually unstoppable, the best way to ensure the safety and security of a business is to seek guidance from a knowledgeable legal professional. Ifrah Law remains up to date on every development in this complex field of modern legal doctrine, and once retained, they could share that knowledge to protect the security of the company.

How Ifrah Law Could Help Protect Your Business

Ifrah attorneys are on the cutting edge of this expanding field, ranging from advising financial services clients on emerging issues in crowdfunding to representing clients placed on the Department of Treasury’s Office of Foreign Assets Control (OFAC) sanctions list.

Our in-depth knowledge of the payment and online gaming industry, in addition to our established litigation track record in financial services, privacy and data protection, and marketing and consumer protection, certifies us to protect your business and your concerns. Within the organizational structure of a client’s business, we work to identify and mitigate risk with senior executive management, legal counsel, risk professionals, sales representatives, online gaming merchant services team members, and other appropriate core staff.

We know how to balance aggressive legal tactics with practical concerns to represent you most effectively and can recommend strategies that put you at the least personal and professional risk. We stay with you and your case throughout the entire process, representing you from start to finish.

Ifrah Law advises clients on matters relating to payment processing, electronic payments and online gaming merchant transactions, including the following representative matters:

  • Drafting, negotiating and enforcing agreements between banks, processors, and other financial services, payment processing parties, and vendors
  • Developing policies and best practices for monitoring and managing risk with merchants
  • Compliance with financial and consumer protection regulations, including the Payment Card Industry Data Security Standards (PCI DSS) requirements
  • Defense of banks and payment processors in matters relating to merchants, reserve accounts, and third-party claims
  • Responding to investigations, requests for information, and government subpoenas
  • Privacy matters relating to eCommerce and the use of consumer data under regulatory initiatives, like the FTC’s proposed revisions to the Children’s Online Privacy Protection Act rules, the Privacy Bill of Rights, and self-regulatory projects like the Digital Advertising Alliance’s and the World Wide Web Consortium’s “Do Not Track” standards
  • FinCEN Registration and state licensing of money services businesses
  • Virtual currency business, such as Bitcoin
  • Anti-Money Laundering (AML) policy drafting, including drafting data security policies, employee screening, and encryption
  • MATCH/TMF Merchant support
  • Merchant reseller agreements
  • Merchant processing affecting continuity/rebill model
  • Internal audits of merchants for ISOs/payment processors
Publications + Presentations
September 17, 2020 | Presentation

EGR U.S. Virtual Power Summit

Snapshot session: Regulatory Q&A session

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September 25, 2019 | Publication

The Definitive Guide to Online Gaming and Betting in the U.S.

Comprehensive eBook from Ifrah Law, available as a complimentary download

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April 11, 2019 | Presentation

(Moderator) Roundtable: “Payment processing: A financial perspective on online gaming in the US”

EGR North America East Coast Briefing - Atlantic City, NJ

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January 31, 2018 | Presentation

Payments Bowl: State of Acceptance: Surcharge/Cash Discounts

Northeast Acquirers Association Conference - Newark, NJ

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March 8-10, 2017 | Presentation

Know Your Processor – How Merchant Accounts Strive, Thrive, and Stay Alive

Panama GB Summit, Panama City, Panama

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December 2016 | Publication

High-Risk Merchant Processing Just Got Riskier

FeedFront Magazine

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December 2016 | Publication

US Banking Regulators Consider Enhanced Cyber Risk Standards

Cyber Security Practitioner

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July 20, 2016 | Presentation

CFPB’s Proposed Arbitration Ban – What You Need To Know

American Bar Association

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March 17, 2015 | Publication

Bureaucracy Unlimited

FEE.org

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October 2014 | Publication

FTC Staff Recommendations for Mobile Financial Services

E-Finance & Payments Law & Policy

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September 2014 | Publication

The FTC Releases Staff Report on Mobile Shopping Apps

E-Commerce Law & Policy

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Case Studies

Ifrah Law Achieves Swift Removal of Payment Processing Client from OFAC List in Highly Unusual Government Action

In September 2016, the U.S. Treasury Department Office of Foreign Assets Control (OFAC) announced it had designated Ifrah Law’s client, a legitimate international business, as a transnational criminal organization. Our client had conducted its business for decades without incident, providing payment processing solutions for direct mail, eCommerce, gaming, charitable, and other customers.

The OFAC designation of a legitimate business was the first of its kind, having been previously limited to terrorist and organized crime entities, such as the Yakuza, MS-13, and Saddam Hussein. The designation indicated that OFAC was expanding its authority under its legal mandate. Given the novelty of this designation, the company contacted Ifrah Law based on our background and extensive experience representing payment processors: understanding their business was critical to our ability to combat the Government’s misperceptions about the payment processing business.

First, we began an internal investigation. As the OFAC designation was a surprise to the company, and the Treasury Department had no obligation to explain the basis for the designation, we needed to determine why our client had been targeted.

We also needed to address the reverberating effects of the designation on our client. An OFAC designation results in the prohibition of U.S.-based businesses including banks from working with a designee. Our client lost the ability to pay employees, vendors, and general expenses and eventually was forced to close its operations.

Ifrah Law achieved some of the swiftest ever removals from OFAC’s SDN list, including all of the 12 individuals named. One year after the initial listing, OFAC finally signed an agreement to remove our client’s companies, officers and employees from the SDN List. We continue to represent this client in actions concerning the financial situation of the now defunct company, and to ameliorate the damage caused by the listing on both individual and corporate reputations. Our work on this case was featured in The American Lawyer.

Clearing SEC Charges Against a Former Securities Broker

When the U.S. government pushed Frederick O’Meally, the former Prudential Securities Inc. broker pushed back – and won.

Ifrah Law acted as co-lead counsel in obtaining a jury verdict, rejecting claims by the U.S. Securities and Exchange Commission that O’Meally defrauded 60 mutual fund companies. The jury also rejected the SEC’s negligence claims with respect to 54 of the funds and found only that O’Meally was negligent in his conduct with respect to six of the funds.

Mr. O’Meally had fought the SEC for eight years, claiming his innocence and sticking up for his rights. The SEC asserted that the mutual fund companies had tried to prevent O’Meally from market timing on behalf of his clients, and that he had continued doing so through deception involving multiple account numbers and numerous financial advisor identifying numbers used in trades. But after a four-week trial, the jury found that the defendant did not commit any intentional fraud against the mutual fund companies. Evidence at trial showed that O’Meally had not misused these tools and that, in fact, all of his trading practices had been approved multiple times by his supervisors, by Prudential Securities lawyers and compliance personnel, and even by outside regulators.

The O’Meally case was one of the very small number of SEC compliance cases that go to trial each year, and one of an even smaller number of cases in which a jury has completely rejected SEC claims of fraud. While Prudential Securities and a number of other brokers targeted by the SEC negotiated settlements, Ifrah Law was part of the team that helped Frederick O’Meally vindicate his claims that he was innocent of the SEC’s fraud accusations.

(Securities & Exchange Commission v. O’Meally, No. 06-Civ-6483 (LTS) (S.D.N.Y.), No. 13-1116 (2d Cir.) )

Obtaining a Reversal of Conviction and Sentence Reduction for Securities Fraud

Ifrah Law represented a former Homestore.com executive, Stuart Wolff, who was indicted for securities fraud. During a six-year battle with the U.S. Attorney’s Office for the Central District of California, the trial and appellate teams worked together to secure a reversal of the client’s conviction and a new trial.

In the months leading up to the second trial, the defense team, which included Jeff Ifrah of Ifrah Law, leveraged irregularities with discovery to obtain dismissal of all charges related to PricewaterhouseCoopers, Homestore’s former accounting firm. As a result, the sentence on remand was reduced by 70 percent relative to the sentence imposed after the first trial.

Jeff Ifrah was the only attorney Mr. Wolff retained from the beginning of the case to its conclusion. Mr. Ifrah began managing the legal team after the first trial, continued through the appellate process, and also in the team’s preparation for trial on remand.

Jeff Ifrah was responsible for formulating and executing the strategy that resulted in the 70 percent reduction of Mr. Wolff’s sentence.

(U.S. v. Wolff, Case No. 2:05-cr-00398 (U.S. District Court, Central District of California))

Advising eSports Company on ICO, Cryptocurrencies, Compliance, and Regulation

Unikrn, an international leader in eSports products and content, asked us to provide legal
advice on various new products, including its initial coin offering: we provided strategic advice
on the products and games on which the cryptocurrencies could be used, while remaining
compliant with U.S. gaming and financial services regulation on the federal and state level. We
also worked closely with Unikrn during all phases of development of their product, including
revisions to the product and games, updates to the ICO whitepaper, and various regulatory and
compliance strategies. We continue to advise Unikrn on various new gaming offerings and are
advising on licensing matters in newly opened sports betting markets.

Blog Posts
January 5, 2018

The Territorial Tax System Under the Tax Cuts and Jobs Act

The Territorial Tax System Under the Tax Cuts and Jobs Act

Last year, the Senate and House approved the Tax Cuts and Jobs Act along partisan lines; on December 21st, President Trump signed the bill into law. Nearly 1100 pages long, the Act makes a number of sweeping changes to the U.S. tax code. Among other things, the bill reduces individual income tax rates, nearly doubles… Read More

December 5, 2017

Did the Paradise Papers and Panama Papers Play a Role in the GOP Tax Plan?

Did the Paradise Papers and Panama Papers Play a Role in the GOP Tax Plan?

Congress is poised to deliver on tax reform this year. As part of the package, both houses are seeking to encourage the repatriation of trillions of dollars that corporations and wealthy individuals have been stockpiling offshore. For decades, corporations and wealthy individuals have been able to avoid taxes legally by transferring assets to tax-friendly jurisdictions… Read More

June 3, 2016

What the Payday Proposal Would Do

What the Payday Proposal Would Do

The Consumer Financial Protection Bureau (CFPB) has proposed a new rule to regulate payday lending and auto-title loan companies. Right now, it is merely a proposal, meant to undergo the notice and comment period until September 14, 2016. But if the rule goes into effect, it would be a significant imposition on the lending business…. Read More