Paddle Faces $5 Million FTC Penalty for Enabling Tech Support Fraud

FTC Cracks Down on Payment Processor’s Role in Deceptive Schemes

On June 16, 2025, the Federal Trade Commission (FTC) announced a $5 million settlement with Paddle.com Market Limited and its U.S. subsidiary, addressing allegations that the payment processing platform facilitated deceptive tech support scams targeting U.S. consumers, particularly older adults. The settlement highlights the FTC’s focus on holding payment facilitators accountable for enabling fraudulent schemes, raising concerns for the subscription billing and merchant-of-record ecosystem.

How Paddle Enabled Tech Support Scams

Paddle processed over $12.5 million in payments for PC Vark, a company accused of using scareware tactics, such as deceptive pop-up alerts, to trick consumers into purchasing unnecessary tech support services. Despite high chargeback rates exceeding 7% and numerous consumer complaints, Paddle continued to process payments, violating Visa and Mastercard rules as an unregistered payment facilitator. The FTC also alleged that Paddle pursued revenue-sharing deals with high-risk processors to sustain profits from questionable clients, ignoring explicit warnings about fraudulent activities.

Protecting Consumers from Tech Support Scams

The FTC’s action against Paddle underscores the growing threat of tech support scams, which often exploit vulnerable consumers through unsolicited pop-ups or calls falsely claiming system infections. To avoid falling victim:

• Be wary of pop-ups or unsolicited calls claiming to be from Microsoft, McAfee, or other antivirus providers—these are typically scams.
• Avoid purchasing software from unfamiliar websites or ads.
• Use ad blockers and internet security tools to prevent malicious redirects.

This settlement follows similar FTC actions, including a 2024 case against Nexway, which paid over $610,000 in refunds for facilitating tech support scams. The FTC’s 2024 fraud report highlighted imposter scams, including tech support fraud, as the second-largest source of consumer losses, trailing only investment scams.

Industry-Wide Implications for Payment Processors

The Paddle settlement sends a strong message to payment platforms and subscription billing providers: failure to monitor high-risk merchants can lead to significant penalties. As the FTC ramps up enforcement, companies must prioritize compliance and fraud detection to avoid legal and financial repercussions.