CFPB Redress for BrightSpeed Victims: What Consumers Need to Know

The Consumer Financial Protection Bureau (CFPB) is distributing more than $53 million in redress to consumers who were harmed when BrightSpeed Solutions, Inc., a payment processor, handled transactions for tech-support scammers. This enforcement action highlights how financial intermediaries can be held responsible when they enable fraud, and how federal agencies can step in to compensate victims.

Background: Who Is BrightSpeed and What Went Wrong?

BrightSpeed Solutions, Inc. was a privately owned, third-party payment processor based in Chicago and founded in 2015. The company processed remotely created checks (RCCs) for more than 100 client companies, handling over $70 million in payments between 2016 and 2018.

Many of BrightSpeed’s clients marketed supposed antivirus and technical-support services to consumers, often targeting older adults through internet pop-ups and telemarketing. According to the CFPB, these companies used deceptive tactics to pressure consumers into buying expensive and unnecessary products or services, sometimes costing up to $2,000.

The CFPB alleged that BrightSpeed and its founder, Kevin Howard, continued to process payments for these merchants despite:

• Nearly 1,000 consumer complaints about fraud and poor service
• Concerns raised by banks about unusually high return rates
• Evidence that many transactions were associated with fraudulent telemarketing schemes

Key Legal Issues in the BrightSpeed Case

The CFPB sued BrightSpeed and Kevin Howard in federal court, alleging violations of federal consumer financial laws. The case turned on several important legal concepts that affect how payment processors are regulated.

Unfair Acts and Practices

Under the Consumer Financial Protection Act of 2010, it is illegal for covered entities to engage in unfair acts or practices. An act is considered unfair when it:

• Causes, or is likely to cause, substantial injury to consumers
• Is not reasonably avoidable by consumers
• Is not outweighed by countervailing benefits to consumers or competition

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The CFPB alleged that BrightSpeed’s decision to continue processing payments for obviously problematic merchants met this standard, because consumers were being charged for fraudulent services they did not genuinely need or knowingly consent to purchase.

Telemarketing Sales Rule Violations

The complaint also alleged violations of the Telemarketing and Consumer Fraud and Abuse Prevention Act and its implementing regulation, the Telemarketing Sales Rule (TSR). The TSR prohibits deceptive and abusive telemarketing practices and includes specific rules for how payments can be obtained in telemarketing transactions.

In the BrightSpeed matter, the CFPB asserted that the company:

• Processed payments for telemarketers who misrepresented the nature and value of their tech-support services
• Ignored red flags signaling that clients were violating the TSR
• Failed to implement reasonable due diligence and monitoring controls for high-risk merchants

CFPB Authority Over Payment Processors

The case raised questions about how far the CFPB’s jurisdiction extends over third-party payment processors. To act, the Bureau must show that a company is a covered person or a service provider that offers or provides a consumer financial product or service. In the BrightSpeed action, the CFPB asserted that by processing consumer payments through RCCs for merchants selling consumer services, BrightSpeed fell within its jurisdiction.

Settlement and Court Order: Bans, Penalties, and Redress

In January 2022, the CFPB filed a proposed stipulated judgment and order to resolve the case, which the court entered on January 19, 2022. The order imposed a mix of industry bans, monetary redress, and penalties.

Permanent Industry Bans

The court order permanently barred BrightSpeed and Kevin Howard from multiple consumer finance-related industries. They are prohibited from:

• Payment processing
• Consumer lending
• Deposit-taking
• Financial-advisory services
• Debt collection activities
• Telemarketing related to consumer financial products or services

These bans are designed to prevent future harm by keeping individuals who enabled serious misconduct away from core consumer financial activities.

Monetary Judgment and Civil Penalty

The judgment entered against BrightSpeed and Howard included:

• $54 million in monetary relief and damages, reflecting consumer payments for bogus services that had not been refunded
• A $500,000 civil money penalty, payable to the CFPB and deposited into its Civil Penalty Fund

The $54 million redress obligation was suspended conditioned on the payment of the civil penalty and the accuracy of the defendants’ sworn financial statements. However, consumers’ compensable harm was calculated at approximately $53,885,244, representing the total amount of qualifying consumer transactions.

How the Civil Penalty Fund Supports Victims

The CFPB’s Civil Penalty Fund, created under the Dodd-Frank Act, allows the Bureau to use civil penalties collected in one case to compensate victims in other matters when direct redress from wrongdoers is impracticable or insufficient. In the BrightSpeed case, the Fund is a crucial mechanism for delivering payments to affected consumers even though the defendants could not pay the full monetary judgment.

Redress Distribution: How Consumers Are Being Paid

The CFPB has identified approximately 122,507 consumers who purchased tech-support services from BrightSpeed’s fraudulent clients via remotely created checks and are eligible for compensation. The Bureau is using standard processes it applies in other enforcement cases to distribute funds and notify victims.

Who Is Eligible for Payment?

Eligible consumers generally share these characteristics:

• They bought technical-support or antivirus products or services from merchants that used BrightSpeed as their payment processor.
• The payment was made using a remotely created check drawn from the consumer’s bank account.
• The transaction took place during the period when BrightSpeed was processing payments for the fraudulent merchants (primarily 2016–2018).
• They have not already received a full refund for the transaction.

How the CFPB Calculates Redress

According to the CFPB’s public case information, compensable harm is equal to the full amount consumers spent on the fraudulent tech-support services that were not refunded, totaling roughly $53.9 million. The Bureau typically:

• Collects data from bank records, payment processors, merchants, and prior complaints
• Determines which transactions were part of the unlawful scheme
• Excludes amounts that were already reimbursed or reversed
• Allocates available funds proportionally among eligible consumers

In some cases, consumers receive checks or electronic payments automatically using available contact information; in others, they may be asked to verify their identity or provide updated details before receiving funds.

What Consumers Should Expect

Consumers who are eligible for compensation in the BrightSpeed matter can generally expect:

• Official communications from the CFPB or a contracted claims administrator, not from private law firms seeking fees
• Clear instructions on how to cash or deposit any checks, or how to access electronic payments
• No requirement to pay money or provide sensitive information (such as full Social Security numbers) to receive redress

The CFPB warns consumers to be cautious about impersonation scams that misuse the name of the agency or the Civil Penalty Fund. The Bureau’s official website provides case-specific details and contact information for verification.

Why This Case Matters for Consumer Protection

The BrightSpeed action demonstrates how payment processors can either prevent or perpetuate fraud. By holding a processor accountable for enabling telemarketing scams, the CFPB signaled that companies handling consumer payments must actively manage risk and respond to red flags.

Lessons for Payment Processors and Financial Institutions

The case sends several clear messages to processors, banks, and other intermediaries:

• High-risk merchants require heightened scrutiny. Businesses that rely on telemarketing, pop-up ads, or tech-support offerings are often associated with elevated fraud risk.
• Red flags cannot be ignored. Large volumes of complaints, high payment return rates, and concerns from banks or card networks must trigger meaningful investigation and corrective action.
• Compliance programs must be substantive. Written policies alone are not enough; firms must implement real controls for onboarding, monitoring, and offboarding merchants.
• Assisting scams can create liability. Even if a processor does not interact directly with consumers, it can be liable when it substantially assists merchants that violate federal law.

Implications for Consumers

For consumers, especially older adults who are frequently targeted by tech-support scams, the case has several important implications:

• Federal regulators are increasingly focused on elder financial exploitation and technology-related fraud.
• Victims of scams may still receive compensation even if the company that directly took their money has shut down, if intermediaries are held responsible.
• Keeping records of suspicious transactions and complaints can be crucial when regulators investigate and later identify eligible victims.

Protecting Yourself from Tech-Support and Payment Scams

While regulatory enforcement and redress programs are important, consumers can reduce their risk of harm by following some practical safeguards.

Recognizing Tech-Support Scams

Common warning signs include:

• Unexpected pop-up messages claiming your computer is infected and giving a phone number to call
• Calls from someone who says they are from a well-known tech company and need remote access to your computer
• Pressure to act immediately or risk data loss or account compromise
• Requests for payment via wire transfer, gift cards, or unusual payment methods

The Federal Trade Commission (FTC) and CFPB regularly publish alerts and guidance on avoiding such scams and what to do if you are targeted.

Safer Practices When Paying for Services

• Use payment methods that offer dispute rights (such as credit cards) rather than unusual or hard-to-trace instruments.
• Be wary of businesses that insist on remote check creation or other non-standard payment tools.
• Check your bank statements regularly and report unauthorized or suspicious charges quickly.
• Consult trusted family members or advisors before making large or unexpected tech-support purchases, especially if you feel pressured.

Frequently Asked Questions (FAQs)

Q: Why is the CFPB involved in a case about tech-support scams?

A: Although the underlying conduct involved fraudulent tech-support services, the CFPB’s authority is tied to financial transactions. In this case, BrightSpeed processed consumer payments for the scammers, making the conduct subject to federal consumer financial laws and the Telemarketing Sales Rule.

Q: How much money is being returned to consumers in the BrightSpeed matter?

A: The CFPB has identified about $53.9 million in compensable consumer harm tied to the fraudulent tech-support transactions. That amount guides the Bureau’s redress distribution using available funds, including money from its Civil Penalty Fund.

Q: Do affected consumers need a lawyer to receive compensation?

A: No. In CFPB-administered redress programs, eligible consumers typically receive payments directly or through an appointed administrator. Consumers do not need to hire a private attorney or pay a fee to claim their share of the redress.

Q: How can I verify that a payment or letter about the BrightSpeed case is legitimate?

A: You can visit the CFPB’s official website and locate the BrightSpeed enforcement case page, which includes contact information and updates on redress distributions. If you receive a check or notice, compare the information with what is posted there or contact the CFPB directly before depositing or responding.

Q: What should I do if I think I was harmed but did not receive a payment?

A: Review the eligibility criteria described in the CFPB’s public materials and gather any relevant documentation (bank records, invoices, or emails). Then check the official case page or contact the CFPB to ask whether there is a process for submitting additional information related to potential eligibility.

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Author

medha deb

 

Medha Deb is an editor with a master's degree in Applied Linguistics from the University of Hyderabad. She believes that her qualification has helped her develop a deep understanding of language and its application in various contexts.

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