Corporate Misconduct Accountability Project
Complete Merchant Solutions, LLC · FTC enforcement action
Complete Merchant Solutions Helped Fraudsters Steal Over $93 Million
Payment processor Complete Merchant Solutions and former CEO Jack Wilson allegedly enabled three major fraud schemes to operate for years, facilitating over $93 million in charges to consumers by deliberately circumventing safety measures designed to detect and stop fraudulent merchants.
CRITICAL SEVERITY
TL;DR
Complete Merchant Solutions (CMS), a Utah-based payment processor, allegedly helped fraudulent businesses charge over $93 million to consumers’ credit and debit cards. The FTC claims CMS deliberately opened and maintained accounts for merchants it knew were engaged in pyramid schemes, deceptive business coaching scams, and unauthorized billing operations. Instead of stopping these merchants when red flags appeared, CMS allegedly helped them hide their activity, spread transactions across multiple accounts, and mislead banks about what they were actually selling.
This case reveals how payment processors can become enablers of fraud when profit takes priority over consumer protection.
$93M+
Total consumer losses facilitated by CMS
$66M
Processed for USFIA pyramid scheme alone
$15M
Processed for Tarr’s deceptive trial offers
$14M
Processed for Apply Knowledge coaching scam
15
Merchant accounts opened for single fraud operation (Tarr)
$250K/yr
Annual severance payment to CEO after misconduct identified
The Allegations: A Breakdown
Core Allegations
What Complete Merchant Solutions did to enable fraud · 8 points
| 01 | CMS arranged for merchants to open payment processing accounts when CMS knew or should have known the accounts were being used by third parties that CMS had never screened or approved. These unvetted third parties used the accounts to process millions in fraudulent charges. | high |
| 02 | CMS helped merchants conceal their true business activities from acquiring banks and card networks. When merchants applied to sell one product (like $39.95 web hosting), CMS allowed them to actually process thousands of dollars in completely different products (like expensive business coaching) that had never been underwritten. | high |
| 03 | CMS actively helped the Tarr fraud operation implement ‘load balancing’ by spreading transactions across 15 different merchant accounts. This tactic prevented any single account from triggering fraud detection systems based on chargeback thresholds, allowing unauthorized billing to continue for years. | high |
| 04 | CMS CEO Jack Wilson told a bank employee concerned about obvious fraud indicators: ‘If it is picked up, which it probably won’t be then we close it down. VISA isn’t going to say we are aiding and abetting nor will the regulators. So we just need to move forward.’ The account was approved despite warnings it triggered all indicators in VISA’s fraud prevention guidelines. | critical |
| 05 | CMS co-founder David Decker advised Apply Knowledge’s owner to establish a new LLC under his wife’s name specifically to hide the connection to Apply Knowledge’s problematic existing accounts. This allowed the fraud operation to continue processing through what appeared to be an unrelated new merchant. | high |
| 06 | When banks questioned suspicious merchant activity, CMS provided false information to keep accounts open. For the USFIA scheme, CEO Wilson told the bank that Amauction ‘had regularly scheduled auctions which caused their volume to spike’ when a company employee had actually told him ‘there would be no auctions anymore’ and the last one was in 2012 or 2013. | high |
| 07 | CMS ignored its own written policies that classified certain business models as ‘disqualifying items.’ Multiple Tarr applications clearly indicated they used ‘free trials with subsequent billing,’ which CMS’s underwriting policy explicitly prohibited, yet CMS submitted these applications to banks for approval anyway. | medium |
| 08 | An independent auditor found in December 2016 that CMS’s underwriting team ‘was not able to assess predict or quantify the risk associated with merchant processing’ and failed to show ‘the expertise to effectively underwrite or monitor high risk accounts’ despite focusing on high-risk merchants for over eight years. | high |
Regulatory Failures
How CMS exploited gaps in oversight · 6 points
| 01 | Card networks and banks rely on payment processors like CMS to conduct due diligence on merchants, but CMS allegedly turned this gatekeeping role into an opportunity to profit from merchants that legitimate processors would reject. CMS co-founder Kyle Hall stated their ‘core industry is sales force coaching programs, things more of a high risk nature’ because ‘there’s a lot larger margin in those deals.’ | high |
| 02 | In 2009, Global Payments notified CMS that its overall portfolio chargeback rate was over 4 percent (four times the expected rate) and that two-thirds of CMS’s merchants were ‘prohibited business types.’ Despite this early warning of systemic problems, CMS continued similar practices for at least seven more years. | high |
| 03 | CMS allegedly helped merchants stay under chargeback thresholds that would trigger card network monitoring programs. These programs flag merchants with 100 or more chargebacks per month and a 1 percent chargeback rate. By spreading one merchant’s transactions across multiple accounts, CMS helped fraudsters avoid detection even when their aggregate chargeback rates were dangerously high. | medium |
| 04 | When CBCal’s Bank Secrecy Act department flagged USFIA accounts for suspicious activity including massive volume overages and a YouTube video where the owner ‘outlines an almost pyramid scheme,’ CMS provided misleading explanations to satisfy the bank’s inquiries rather than investigating or terminating the accounts. | high |
| 05 | Card networks require processors to report hacking incidents because they can compromise consumer data. When an USFIA employee blamed a website redirect on being ‘hacked,’ CMS did not report this to the bank. Instead, CEO Wilson told the bank that the merchant had a legitimate business relationship with the other website, a claim that could not account for the merchant’s actual sales volume. | medium |
| 06 | CMS allegedly pressured its acquiring bank to override initial denials of high-risk applications. When CBCal denied the EliteTest360 application, Wilson argued to overturn the decision even after a bank employee warned that approving the account meant ‘there is no way we could play dumb with this file’ and that they could be accused of assisting the merchant in avoiding detection. | high |
Profit Over People
CMS’s financial incentives to enable fraud · 7 points
| 01 | CMS earned money based on each transaction between its merchant clients and consumers. This fee structure created direct financial incentive to maintain high transaction volumes, even when those transactions came from merchants engaged in fraud. The more consumers were charged by fraudulent merchants, the more money CMS made. | high |
| 02 | CMS was founded specifically to serve ‘high risk’ merchants that traditional processors often rejected. Co-founder David Decker explained at Brigham Young University in 2014 that CMS was created to assist ‘high risk’ merchants such as multi-level marketers obtain payment processing services, acknowledging this was CMS’s target market from inception. | medium |
| 03 | When the FTC’s Business Opportunity Rule went into effect in March 2012, increasing regulatory scrutiny of business coaching schemes, CMS nearly doubled the rates it charged Apply Knowledge the day before the rule took effect. When the merchant objected, CMS co-founder Kyle Hall reminded them that CMS had ‘protected’ their accounts from the bank on numerous occasions, suggesting protection from scrutiny warranted higher fees. | medium |
| 04 | CMS repeatedly fought to keep problematic accounts open even when its acquiring bank recommended closure. An internal email stated that regarding Apply Knowledge’s accounts, CBCal had ‘requested that we close it in previous months due to chargebacks, new FTC regulations, etc.’ but CMS had ‘done their best to keep the account open’ until the bank finally insisted. | high |
| 05 | CMS encouraged merchants to request multiple accounts to spread their volume. On September 22, 2014, after convincing CBCal to open the first batch of accounts for Tarr, CEO Wilson encouraged the Tarr employee to request another three merchant accounts for approval from the bank, systematically expanding the infrastructure for load balancing. | medium |
| 06 | CMS worked directly with merchants to manage chargebacks in ways that would keep accounts below bank thresholds rather than address the underlying reasons for high dispute rates. In mid-month, Wilson would alert the Tarr operation when specific accounts were experiencing high chargebacks so Tarr could ‘make adjustments on our balancers to make sure it doesn’t hit the threshold.’ | high |
| 07 | Even after being fired for misconduct related to these activities, former CEO Jack Wilson received a severance package including $250,000 per year for ten years plus health insurance benefits. He also continued to act as a sales agent for CMS, receiving ongoing commissions. This arrangement suggests financial consequences for executives were minimal despite facilitating massive consumer harm. | medium |
Economic Fallout
The financial devastation CMS enabled · 6 points
| 01 | The USFIA pyramid scheme took in over $66 million from consumers through two merchant accounts CMS arranged with Commercial Bank of California. A court-appointed receiver later determined that more than 90 percent of the sales made through these accounts were for illegal pyramid investments, not the antiques and nutraceuticals the accounts were supposedly approved to sell. | critical |
| 02 | Apply Knowledge processed more than $14 million through CMS-arranged accounts from January 2011 through March 2013. Consumers were told they would quickly recoup their investment in expensive business coaching and start making thousands of dollars per month. After three years of litigation, the telemarketers working with Apply Knowledge could not identify a single one of their more than 10,000 customers who had turned a profit or even returned their investment. | high |
| 03 | The Tarr scheme processed over $15 million through 15 CMS-arranged merchant accounts from August 2014 through January 2016. Consumers were deceived by free trial offers that failed to disclose automatic enrollment in costly monthly subscriptions, and by false claims about the effectiveness of weight loss, muscle building, and skin cream products. | high |
| 04 | High chargeback rates, a hallmark of the merchants CMS serviced, impose costs that ripple through the entire financial ecosystem. Card networks impose fees for excessive chargebacks, and acquiring banks and payment processors can lose money when merchants become insolvent or cease operations due to law enforcement actions, leaving disputes unresolved and costs unrecoverable. | medium |
| 05 | The average transaction amount processed through Apply Knowledge’s account was $305, more than seven times the $39.95 monthly web hosting fee stated on the account application. This massive discrepancy meant consumers were being charged far more than they had any reason to expect based on what the account was approved to process. | medium |
| 06 | While CMS profited from transaction fees on over $93 million in allegedly fraudulent sales, the economic impact on consumers and the broader system was overwhelmingly negative. Consumers lost money to schemes that would not have been able to process credit card payments without CMS’s services, and trust in legitimate e-commerce was eroded. | high |
Public Health and Safety
How CMS enabled deceptive health product sales · 4 points
| 01 | CMS enabled Tarr to sell weight loss, muscle building, and skin cream products with what the FTC alleged were false and unsubstantiated effectiveness claims. By helping Tarr maintain 15 merchant accounts and avoid chargeback detection, CMS allowed consumers to continue making health decisions based on misleading information about product efficacy. | medium |
| 02 | Application materials for Tarr’s Garcinia Cambogia Slim Fast product, which CMS received, included a Better Business Bureau report noting the BBB had contacted the company in January 2014 with concerns about unsubstantiated health claims. Despite this documented warning about misleading health claims, CMS submitted the application to its acquiring bank for approval. | medium |
| 03 | CMS’s own written underwriting policies stated that ‘free trials with subsequent billing’ was a ‘disqualifying item,’ yet multiple Tarr application materials clearly indicated 14-day free trials with automatic billing. All seven chargeback reduction plans Tarr submitted to CMS in 2015 also stated the merchant used this negative-option trial model. CMS approved and maintained these accounts despite its policies. | medium |
| 04 | Consumers purchasing health-related products from Tarr were not only financially harmed by unauthorized billing but also potentially relying on products that did not deliver promised health benefits. The combination of deceptive health claims and hidden billing created layered harm where consumers paid for products that could not perform as advertised. | medium |
Corporate Accountability Failures
How consequences were avoided or minimized · 6 points
| 01 | Many of CMS’s merchant clients were eventually shut down by federal law enforcement actions. The FTC sued Apply Knowledge in February 2014, the SEC sued the USFIA enterprise in September 2015, and the FTC sued Tarr in October 2017. However, CMS continued operating and processing payments for years before facing its own enforcement action in December 2020. | high |
| 02 | In January 2016, CBCal contacted CMS co-founder David Decker about an email exchange they believed demonstrated ‘strong misconduct’ by CEO Jack Wilson. When Decker asked Wilson about the emails, Wilson reportedly ‘didn’t really have a response’ and ‘didn’t really remember’ them. CMS executives decided to ‘part ways’ with Wilson but provided him a lucrative exit. | medium |
| 03 | Internal warnings from CMS’s acquiring bank were repeatedly overridden or dismissed. When CBCal employee Vince Lombardo explicitly warned against approving a Tarr account, stating they could be accused of burying their head in the sand and assisting the merchant in avoiding detection, CEO Wilson insisted they ‘just need to move forward’ because regulators probably would not say they were aiding and abetting. | high |
| 04 | CMS required merchants to submit chargeback reduction plans when accounts exceeded 70 chargebacks per month, but these plans were largely pro forma documents. Tarr submitted at least seven chargeback reduction plans in 2015 that were virtually identical, all blaming ‘fraudulent traffic’ as ‘unusual or unforeseen’ despite the merchant’s business model being the source of disputes. CMS accepted these plans without substantive change to merchant practices. | medium |
| 05 | CEO Jack Wilson signed merchant applications for USFIA entities (Amkey and Amauction) verifying he had physically visited their business premises as required. However, when Wilson and CBCal’s analyst later conducted a site visit of Amkey in June 2015, the analyst noted the location appeared ‘staged’ with insufficient and expired inventory for a company making millions in monthly sales, and no employees present. | high |
| 06 | The allegations against CMS span activities from as early as 2010 or 2011 through 2015 or 2016 for various merchants, but the FTC did not file its complaint until December 2020. This lengthy window before facing direct federal action allowed CMS to continue its business model for years while merchant clients victimized consumers. | medium |
The PR Machine
How CMS concealed fraud and misled banks · 6 points
| 01 | When CBCal asked why the Apply Knowledge account’s chargeback ratio continued to worsen, owner Ken Sonnenberg told CMS co-founder Decker he had been processing for two different telemarketing operations. Despite knowing the account was being used by third parties for products not approved in the application, CMS submitted a memo to CBCal in November 2011 stating ‘there has been no change in the product offering since original inception of the merchant account.’ | high |
| 02 | CMS co-founder Decker advised Apply Knowledge’s Sonnenberg to set up a new corporation called Supplier Source under his wife’s name specifically because CBCal associated Apply Knowledge with a ‘bad stigma’ due to chargebacks. When CMS submitted the Supplier Source application, it concealed from the bank that it was related to an existing problematic client and that it would be used for third-party telemarketing of business coaching. | high |
| 03 | CEO Wilson provided false information to CBCal about USFIA’s Amauction business. Wilson told the bank in a February 2015 memo that ‘in early 2014 Amauction had regularly scheduled auctions which caused their volume to spike and dip on a regular basis.’ However, an Amauction employee had told Wilson in January 2015 that she did not think there would be any auctions anymore and the last auction was in 2012 or 2013. | high |
| 04 | When Wilson asked an USFIA employee why the Amauction website redirected to another site called Live Auction, the employee said she would have IT ‘fix it’ because the site had been hacked. Instead of reporting a potential data breach to the bank as required, Wilson told CBCal that Amauction had a business relationship with Live Auctioneers for bidding infrastructure. This business relationship could not account for Amauction’s actual sales volume. | medium |
| 05 | CMS created an appearance of monitoring by requiring chargeback reduction plans from problematic merchants, but these documents were templates with no substance. All seven plans Tarr submitted in 2015 used virtually identical language about experiencing ‘unusual or unforeseen’ fraudulent traffic and promising it would not happen again, despite Tarr’s business model being the fundamental cause of consumer disputes. | medium |
| 06 | When CBCal noted in December 2015 that four different Tarr merchant accounts had the same address, raising obvious questions about whether they were actually separate businesses, CMS told the bank it would place the merchants on 100 percent reserve until they could ‘update the addresses.’ This response treated the shared address as an administrative issue to fix rather than evidence of load balancing. | medium |
Wealth Disparity
Who profited while consumers lost millions · 5 points
| 01 | CMS collected transaction fees on over $93 million in charges to consumers through merchants engaged in fraud. While consumers collectively lost these millions to deceptive schemes, CMS and its executives benefited financially from providing the payment processing infrastructure that made these schemes possible at scale. | high |
| 02 | Former CEO Jack Wilson received a severance package including $250,000 per year for ten years (totaling $2.5 million) plus health insurance benefits after CMS parted ways with him due to conduct issues. He also continued to receive commissions as a sales agent for CMS. This outcome meant Wilson faced minimal personal financial consequences despite his alleged role in facilitating massive consumer harm. | high |
| 03 | When regulatory risks increased for Apply Knowledge as the FTC’s Business Opportunity Rule took effect in March 2012, CMS nearly doubled its processing rates for the merchant the day before the rule went into effect. This rate increase suggests CMS sought to extract more profit from a client whose legal risks were growing, essentially charging a premium for continued service to a problematic account. | medium |
| 04 | CMS co-founder Kyle Hall justified higher fees to Apply Knowledge by noting that CMS had ‘protected’ the merchant’s accounts from the bank on numerous occasions. He stated that without CMS’s protection, the accounts ‘would have been cutoff, mid-month, without warning, as per the Bank’s recommendations.’ This implies CMS viewed its intervention against bank risk assessments as a service worth charging for. | medium |
| 05 | CMS was strategically created to target ‘high risk’ merchants because, as co-founder Kyle Hall stated, ‘there’s a lot larger margin in those deals.’ This business model meant CMS deliberately focused on a client segment that posed greater risk to consumers specifically because those merchants generated higher profit margins for CMS. | medium |
Exploiting Delay
How time allowed fraud to continue and profits to accumulate · 6 points
| 01 | Apply Knowledge processed over $14 million through CMS from January 2011 to March 2013, over two years before the FTC filed its lawsuit against Apply Knowledge in February 2014. The extended period before enforcement action allowed the business coaching fraud to victimize thousands of consumers and generate sustained revenue for both Apply Knowledge and CMS. | high |
| 02 | The USFIA pyramid scheme processed over $66 million through CMS-arranged accounts from January 2011 until July 2015, when CMS finally closed the accounts after sustained bank scrutiny. The SEC did not file its lawsuit against USFIA until September 2015. This four-and-a-half-year operational window allowed the scheme to reach massive scale. | critical |
| 03 | CMS often acted to address problematic accounts only when pressured by its acquiring bank or when merchants attracted external scrutiny. For Apply Knowledge, CBCal had ‘requested that we close it in previous months due to chargebacks, new FTC regulations, etc.’ but CMS had ‘done their best to keep the account open’ until the bank finally insisted, extending the merchant’s operational window. | high |
| 04 | When CBCal’s Bank Secrecy Act department began questioning USFIA’s Amauction and Amkey accounts in December 2014 due to massive volume overages, CMS provided explanations and documents over several months rather than immediately terminating the accounts. The Amauction account was not closed until April 2015, and the Amkey account not until July 2015, allowing millions more in processing during the investigation period. | high |
| 05 | Pro forma chargeback reduction plans functioned as delay tactics that temporarily satisfied procedural requirements while allowing merchants to continue operating. Each time CMS accepted one of Tarr’s nearly identical plans blaming ‘unusual’ events, it likely bought the merchant more time to process transactions before facing potential account termination. | medium |
| 06 | CMS allegedly advised merchants on ways to structure their operations that would delay detection. By helping Tarr implement load balancing across 15 accounts and advising Apply Knowledge to open accounts under different names and ownership, CMS created complexity that made it harder for banks and card networks to identify problems quickly, extending the time these merchants could operate. | high |
The Bottom Line
What this case reveals about payment processing and accountability · 6 points
| 01 | Payment processors occupy a critical gatekeeping role in the financial system, but the CMS case demonstrates how this position can be exploited when a processor prioritizes revenue over consumer protection. CMS allegedly transformed from gatekeeper into enabler, actively helping fraudulent merchants access and maintain payment processing capabilities they should never have received. | critical |
| 02 | The three major fraud operations CMS allegedly enabled (Apply Knowledge, USFIA, and Tarr) were eventually shut down by federal enforcement actions, but only after they had already victimized consumers out of tens of millions of dollars. This pattern suggests that current detection and enforcement mechanisms act too slowly to prevent large-scale harm once fraudulent merchants gain access to payment systems. | high |
| 03 | Internal warnings and red flags were allegedly ignored or overridden when they conflicted with revenue interests. The email exchange where CEO Wilson dismissed a bank employee’s explicit warning about aiding and abetting fraud epitomizes how profit motives can overwhelm risk management and ethical considerations when accountability mechanisms are weak. | high |
| 04 | CMS co-founder Kyle Hall’s statement that they targeted ‘high risk’ merchants because ‘there’s a lot larger margin in those deals’ reveals a business model predicated on serving clients that carry elevated consumer harm risk. This strategic focus on problematic merchants was not incidental to CMS’s operations but central to its profit strategy from inception. | high |
| 05 | The case illustrates a systemic vulnerability where financial incentives can directly conflict with consumer protection duties. CMS earned transaction fees on every charge processed, meaning the company profited more when high-volume merchants stayed active longer, even when those merchants generated high dispute rates indicating consumer harm. | high |
| 06 | Reforms are needed to prevent payment processors from exploiting their intermediary position. Stronger regulatory oversight, aggregate chargeback monitoring across related accounts, clearer liability for facilitating fraud, and more severe consequences for executives could help realign incentives toward consumer protection rather than enabling harm for profit. | medium |
Timeline of Events
2008
Complete Merchant Solutions (CMS) is founded by David Decker, Trever Hansen, and Kyle Hall to serve ‘high risk’ merchants like multi-level marketers and business coaching operations.
2009
Global Payments notifies CMS that its overall portfolio chargeback rate is over 4 percent (four times expected rate) and two-thirds of CMS merchants are ‘prohibited business types.’
2009
Jack Wilson becomes Chief Executive Officer of CMS, a position he holds through 2016.
June 2010
CMS arranges opening of merchant account for Amkey Inc. (owned by Steve Chen of USFIA), claiming it will sell nutritional supplements and personal care products.
May 2010
CMS submits merchant application for Apply Knowledge, stating it will process $39.95 monthly web hosting fees, not expensive business coaching packages.
January 2011
Apply Knowledge and USFIA begin processing millions of dollars through CMS-arranged accounts, continuing for years.
July 2011
Apply Knowledge owner Ken Sonnenberg asks CMS co-founder David Decker to set up another merchant account so Apply Knowledge would not be ‘running too much volume under one account.’ Decker suggests using a different LLC under Sonnenberg’s wife’s name to avoid Apply Knowledge’s ‘bad stigma’ with the bank.
November 2011
American Express places Ken Sonnenberg on the MATCH list due to excessive chargebacks on his merchant account.
December 2011
Ken Sonnenberg has employee set up Supplier Source LLC under his wife’s name as advised by Decker. CMS submits application for this account, concealing its connection to Apply Knowledge.
March 2012
CMS nearly doubles processing rates for Apply Knowledge the day before the FTC’s Business Opportunity Rule takes effect, increasing regulatory scrutiny of business coaching schemes.
June 2012
Salt Lake City Weekly publishes article ‘Phone Predators: Utah’s telemarketing wolf packs’ with critical accounts of Apply Knowledge from former telemarketer and customer. CBCal demands CMS terminate Apply Knowledge accounts.
August 2012
CMS arranges opening of second account for Steve Chen in name of Amauction Inc., claiming it will sell arts and antiques mostly face-to-face.
October 2012
CMS ‘restructures’ and reopens the Supplier Source (Apply Knowledge) account after brief closure, allowing it to process over $4 million more through May 2013.
November 2013
Steve Chen applies for third merchant account in name of USFIA Inc. While CMS evaluates this application, processing volume on Chen’s existing Amkey and Amauction accounts increases dramatically from $120,000 per month to over $1 million per month.
February 2014
FTC files lawsuit against Apply Knowledge enterprise for operating fraudulent business coaching scheme.
July 2014
CMS denies USFIA Inc. merchant application, but continues processing massive volumes for Chen’s existing Amkey and Amauction accounts.
July 2014
Tarr employee Jack Cooper sends CEO Jack Wilson three merchant applications for diet supplement and muscle building products using free trial offers. CMS submits applications despite its own policy stating ‘free trials with subsequent billing’ is a ‘disqualifying item.’
August 2014
CBCal initially denies Tarr’s EliteTest360 application. In email exchange, bank employee Vince Lombardo warns approving it would mean ‘there is no way we could play dumb’ and merchant triggers ‘all of the indicators listed in the VISA best practices guidebook.’ CEO Wilson insists they ‘just need to move forward’ because ‘VISA isn’t going to say we are aiding and abetting nor will the regulators.’ Account is approved.
August 2014
CEO Wilson asks Tarr’s Cooper whether he can keep chargebacks in the 40 to 50 range if accounts have $100,000 monthly limit. Cooper responds if there’s a problem, ‘we’ll turn the set volume down in our load balance in order to stop chargebacks on that account.’ Wilson replies, ‘That is fine, thanks for the information.’
December 2014
CBCal’s Bank Secrecy Act department flags USFIA’s Amauction account for massive volume overages, inactive website, discrepancies in financial documents, and YouTube video where owner ‘outlines an almost pyramid scheme.’
January 2015
When CBCal asks how Amauction website redirect works, USFIA employee tells Wilson site had been ‘hacked.’ Instead of reporting potential breach, Wilson tells bank Amauction has legitimate business relationship with other website.
February 2015
CEO Wilson tells CBCal in memo that ‘in early 2014 Amauction had regularly scheduled auctions which caused their volume to spike,’ even though Amauction employee had told him there would be no more auctions and last one was in 2012 or 2013.
March 2015
Amkey (USFIA) processing volume surges to $5.69 million as Amauction volume drops to $65,015, suggesting accounts were being used interchangeably as Amauction faced scrutiny.
April 2015
CMS closes USFIA’s Amauction account. Amkey account continues processing, reaching $7.44 million in April.
June 2015
CEO Wilson and CBCal analyst conduct site visit of Amkey location. Analyst notes location appears ‘staged’ with insufficient and expired inventory for a company making millions monthly in sales, and no employees present.
July 2015
CMS closes USFIA’s Amkey account after processing over $66 million total for the USFIA enterprise.
August 2015
Tarr’s Cooper asks CMS to ‘set a hard cap at $75,000 for all of our MIDs’ to ‘help mitigate the number of chargebacks.’ CMS agrees to help keep accounts below bank threshold.
September 2015
SEC files lawsuit against Steve Chen and USFIA enterprise for operating unlawful pyramid scheme involving fake virtual currency called ‘gem coins.’
December 2015
CBCal notes four different Tarr merchant accounts have the same address, raising questions about whether they are actually separate businesses.
January 2016
CMS terminates Tarr accounts, which had processed over $15 million through 15 merchant accounts in names of 10 different corporations.
January 2016
CBCal contacts CMS co-founder David Decker about email exchange between CEO Wilson and bank employee regarding Tarr, which bank believes shows ‘strong misconduct.’ CMS executives decide to ‘part ways’ with Wilson.
2016
Jack Wilson leaves CMS as CEO but receives severance package including $250,000 per year for ten years plus health benefits. He continues as sales agent receiving commissions.
December 2016
Independent audit of CMS finds underwriting team ‘was not able to assess predict or quantify the risk associated with merchant processing’ and failed to show ‘the expertise to effectively underwrite or monitor high risk accounts’ despite focusing on this sector for over eight years.
October 2017
FTC files lawsuit against Tarr Inc. for unauthorized billing and deceptive marketing of weight loss, muscle building, and skin cream products using fake news websites and unsubstantiated health claims.
December 2020
FTC files complaint against Complete Merchant Solutions and Jack Wilson for unfair practices in facilitating over $93 million in fraudulent charges to consumers.
Direct Quotes from the Legal Record
QUOTE 1
CEO dismissing fraud warnings to approve high-risk account
allegations
“If it is picked up, which it probably won’t be then we close it down. If they don’t manage their chargebacks we also shut them down… We have a lot of this type of account and picking it out of our portfolio would be difficult… VISA isn’t going to say we are aiding and abetting nor will the regulators. So we just need to move forward.”
💡 This email from CEO Jack Wilson shows deliberate decision to approve an account despite explicit bank warnings it triggered all fraud indicators, betting on not being caught rather than protecting consumers.
QUOTE 2
Bank employee’s warning about obvious load balancing scheme
regulatory
“It is too obvious that [the merchant] has several accounts and is load balancing the accounts among as many as processors as he can to avoid the card associations [chargeback] programs. If we get an examiner, auditor or card association reviewing this file, there will be a significant issue if we approved a business where we know the client has engineered his card acceptance to avoid chargeback penalties. My main issue with this is there is no way we could play dumb with this file.”
💡 This warning from CBCal employee Vince Lombardo clearly identified the fraud tactic being used but CEO Wilson overrode the concern, showing how oversight can be circumvented when profit motives dominate.
QUOTE 3
CMS founded specifically to serve high-risk merchants for profit
profit
“CMS’s core industry is sales force coaching programs, things more of a high risk nature… there’s a lot larger margin in those deals.”
💡 Co-founder Kyle Hall’s 2009 SEC deposition testimony reveals CMS deliberately targeted merchants known for higher consumer harm risk specifically because they generated higher profit margins.
QUOTE 4
CMS claimed to protect problematic accounts from bank scrutiny
profit
“CMS had ‘protected’ the [Apply Knowledge] enterprise’s accounts from the bank on numerous occasions, and that without Decker’s protection the accounts ‘would have been cutoff, mid-month, without warning, as per the Bank’s recommendations.'”
💡 This April 2012 email from CMS co-founder Kyle Hall to Decker shows CMS viewed its intervention against bank risk assessments as a service worth charging premium fees for, directly monetizing the enablement of fraud.
QUOTE 5
Acknowledging systemic lack of underwriting expertise
regulatory
“CMS’s underwriting team was not able to assess predict or quantify the risk associated with merchant processing. CMS failed to show that it had the expertise to effectively underwrite or monitor high risk accounts.”
💡 A December 2016 independent auditor’s finding reveals that after over eight years of focusing on high-risk merchants, CMS still lacked basic competence to assess risk, suggesting willful inadequacy rather than mere oversight failure.
QUOTE 6
CMS advised merchant to hide identity using wife’s name
pr_machine
“To conceal Sonnenberg’s and Apply Knowledge’s association with the new merchant account, Decker told Sonnenberg that ‘it may not be a bad idea to use another LLC, (if you have one) and have your partner/wife sign on [it].'”
💡 Co-founder Decker’s July 2011 advice to Apply Knowledge shows CMS actively helped merchants structure operations to deceive banks about beneficial ownership and account relationships.
QUOTE 7
Misrepresenting merchant’s actual business to bank
pr_machine
“CMS provided a memorandum to the bank dated November 29, 2011, stating that Decker had visited Apply Knowledge’s offices ‘multiple times’ over the past twelve months, and that ‘[i]t was confirmed, during the visits that there has been no change in the product offering since original inception of the merchant account.'”
💡 This memo to CBCal was false. CMS knew Apply Knowledge was processing expensive business coaching sold by third-party telemarketers, not the $39.95 web hosting stated in the application, but explicitly told the bank nothing had changed.
QUOTE 8
Helping merchant adjust load balancing to avoid detection
allegations
“If there’s a problem with chargebacks, ‘we’ll turn the set volume down in our load balance in order to stop chargebacks on that account.’ Wilson replied, ‘That is fine, thanks for the information.'”
💡 This August 2014 exchange between CEO Wilson and Tarr’s Cooper shows CMS knew Tarr was using load balancing to manipulate chargeback rates and explicitly approved this fraud-enabling tactic.
QUOTE 9
Real-time coordination to keep accounts under scrutiny threshold
delay_tactics
“On October 12, 2015, Wilson told Cooper that one of Tarr’s accounts already had 11 chargebacks that month, and Tarr responded that they would ‘make adjustments on our balancers to make sure it doesn’t hit the threshold.'”
💡 Wilson’s mid-month alerts allowed Tarr to shift transaction volume away from accounts approaching chargeback limits, demonstrating active coordination between CMS and merchant to evade detection systems.
QUOTE 10
Bank explicitly warned CMS about pyramid scheme indicators
regulatory
“On January 14, 2015, Lombardo told Decker and Wilson that ‘BSA is all over these two accounts’ and raised concerns including that on a YouTube video Chen ‘outlines an almost pyramid scheme.'”
💡 CBCal’s Bank Secrecy Act department directly told CMS that USFIA’s owner appeared to be running a pyramid scheme, yet CMS continued processing for the accounts for six more months, allowing millions more in fraudulent transactions.
QUOTE 11
Providing false explanation for website issues to hide potential breach
pr_machine
“When Wilson asked Zhao to explain why the Amauction website redirected to ‘Live Auction,’ Zhao told Wilson that she will have the IT department ‘fix it’ because it had been hacked before. Rather than tell CBCal that Zhao blamed a hacking incident, Wilson stated that Amauction and Live Auction had a business relationship.”
💡 CMS had a duty to report hacking incidents that could compromise consumer data. Instead, Wilson concealed the potential breach from the bank and fabricated a business relationship that could not account for the merchant’s actual sales volume.
QUOTE 12
Independent auditor finding CMS lacked basic risk assessment capability
regulatory
“A December 19, 2018 annual review of CMS conducted by another independent auditor noted that, of the 10 CMS merchant accounts with the largest processing volume in October 2018, nine appeared to be ‘higher risk’ merchants.”
💡 Even in 2018, after the misconduct period covered by the FTC complaint, CMS’s portfolio remained overwhelmingly concentrated in high-risk merchants, demonstrating this was a sustained business model rather than isolated failures.
QUOTE 13
No Apply Knowledge customers ever profited from coaching scheme
economic
“In June 2017, after three years of litigation with the FTC, the Gannuscia telemarketers were unable to identify a single one of the more than 10,000 customers they referred to Apply Knowledge who had turned a profit on, or even returned his or her investment in, the business coaching services.”
💡 This finding from the Apply Knowledge enforcement case reveals the business coaching CMS helped process payments for was a complete fraud with a 100 percent consumer loss rate among over 10,000 victims.
QUOTE 14
Over 90 percent of USFIA sales were illegal pyramid investments
economic
“The court-appointed receiver in SEC v. Chen determined that more than 90% of the sales made by Amauction and Amkey were sales of the illegal pyramid investments, and not the products that the companies purported to sell.”
💡 The accounts CMS maintained for USFIA, which were supposedly for antiques and personal care products, were actually processing investments in an unlawful pyramid scheme for over 90 percent of their $66 million volume.
QUOTE 15
CMS fought repeatedly to keep problematic accounts open
delay_tactics
“CBCal had ‘requested that we close it in previous months due to chargebacks, new FTC regulations, etc.’ and CMS had done their best to keep the account open, but this time the bank was insisting.”
💡 This June 2012 email from CMS VP of Risk Management shows the bank had repeatedly asked CMS to terminate Apply Knowledge accounts, but CMS resisted multiple closure requests to maintain the revenue stream.
Frequently Asked Questions
What exactly did Complete Merchant Solutions do wrong?
Complete Merchant Solutions (CMS) is a payment processor that allegedly helped fraudulent businesses charge over $93 million to consumers’ credit and debit cards. Instead of properly screening merchants and stopping suspicious activity as required, the FTC alleges CMS deliberately opened accounts for merchants it knew were engaged in pyramid schemes, deceptive coaching scams, and unauthorized billing. CMS allegedly helped these merchants hide their activity by spreading transactions across multiple accounts, misleading banks about what was being sold, and even advising merchants on how to structure their operations to avoid detection.
How did CMS help fraudulent merchants avoid being caught?
CMS allegedly used several tactics to help fraudulent merchants evade detection. The FTC claims CMS helped Tarr implement ‘load balancing’ by spreading transactions across 15 different merchant accounts so no single account would hit chargeback thresholds that trigger fraud alerts. CMS allegedly advised Apply Knowledge to open new accounts under different names (including the owner’s wife’s name) to hide connections to problematic existing accounts. When banks questioned high transaction volumes or suspicious activity, CMS allegedly provided false or misleading explanations to keep the accounts open rather than investigating or terminating them.
What were the three major fraud schemes CMS enabled?
The FTC complaint details three major fraudulent operations CMS allegedly enabled. First, the Apply Knowledge enterprise ran a business coaching scheme that processed over $14 million from 2011 to 2013, selling expensive coaching with false income promises (not a single customer out of over 10,000 ever profited). Second, the USFIA enterprise operated a pyramid scheme selling fake virtual currency that processed over $66 million from 2011 to 2015 through accounts supposedly for antiques and supplements. Third, the Tarr scheme used deceptive free trial offers with hidden billing for diet and muscle products, processing over $15 million from 2014 to 2016 through 15 different merchant accounts.
Did CMS executives know they were helping fraudulent merchants?
The FTC complaint includes substantial evidence suggesting CMS executives knew or should have known about merchant fraud. In one email exchange, when a bank employee explicitly warned that a merchant was obviously load balancing to avoid fraud detection and that approving the account would mean ‘there is no way we could play dumb with this file,’ CEO Jack Wilson allegedly replied that they should approve it anyway because ‘VISA isn’t going to say we are aiding and abetting nor will the regulators.’ The bank had also directly told CMS that one merchant’s YouTube video ‘outlines an almost pyramid scheme,’ yet CMS continued processing for that account.
Why did it take so long for CMS to face consequences?
The alleged misconduct spans from around 2009 through 2016 for various merchants, but the FTC did not file its complaint against CMS until December 2020. This delay is partly because regulatory investigations are complex and time-consuming. However, it also illustrates a systemic problem: the three major fraud schemes CMS allegedly enabled were each shut down by separate federal enforcement actions (Apply Knowledge in 2014, USFIA in 2015, Tarr in 2017) years before CMS itself faced action. This lengthy window allowed CMS to continue operating and potentially enabling other problematic merchants while the earlier cases proceeded.
What happened to CMS CEO Jack Wilson after the misconduct was discovered?
In January 2016, after CMS’s acquiring bank (CBCal) raised concerns about Wilson’s ‘strong misconduct’ related to approving obviously fraudulent accounts, CMS decided to ‘part ways’ with Wilson. However, according to the FTC complaint, Wilson received a severance package including $250,000 per year for ten years (totaling $2.5 million) plus health insurance benefits. He also allegedly continued to work as a sales agent for CMS, receiving ongoing commissions. This outcome meant Wilson faced minimal personal financial consequences despite his alleged role in facilitating over $93 million in consumer harm.
How did CMS make money from these fraudulent schemes?
As a payment processor, CMS earned transaction fees every time consumers made a payment to one of its merchant clients. This means CMS made money on every one of the over $93 million in charges to consumers, regardless of whether those charges were fraudulent. This fee structure created a direct financial incentive for CMS to maintain high transaction volumes, even when those volumes came from merchants with extremely high consumer dispute rates. The more consumers were charged by fraudulent merchants, the more money CMS made, which the FTC alleges drove CMS to enable rather than prevent fraud.
What is load balancing and why is it problematic?
Load balancing is a tactic where a merchant spreads its transactions across multiple merchant accounts to prevent any single account from reaching chargeback thresholds that would trigger scrutiny. Card networks like Visa and Mastercard flag accounts with 100 or more chargebacks per month and a 1 percent chargeback rate for potential fraud. By splitting transactions among many accounts, a fraudulent merchant can keep each individual account below these thresholds even if their total operation has an extremely high dispute rate. The FTC alleges CMS helped Tarr implement this tactic across 15 accounts and would alert Tarr mid-month when specific accounts were approaching limits so they could shift volume elsewhere.
Were CMS’s clients actually convicted of fraud?
Yes. The three major merchant clients featured in the FTC complaint were all subject to successful federal enforcement actions. The FTC sued Apply Knowledge in February 2014 for violating the FTC Act and Telemarketing Sales Rule; a stipulated order with conduct prohibitions and monetary judgment was entered in February 2016. The SEC sued the USFIA enterprise in September 2015 for securities fraud; the court granted summary judgment finding it was an unlawful pyramid scheme, and a $71.7 million judgment was entered in March 2017. The FTC sued Tarr in October 2017 for unauthorized billing and deceptive practices; a stipulated order with conduct prohibitions and monetary judgment was entered in November 2017. CMS is now alleged to have enabled all three operations.
What can consumers do if they were charged by merchants that used CMS?
Consumers who were victims of the Apply Knowledge, USFIA, or Tarr schemes may be able to file claims through any restitution or refund programs established as part of those enforcement actions. For any unauthorized or fraudulent charges, consumers should first dispute the charges with their credit card issuer or bank through the chargeback process. Consumers can also file complaints with the FTC at ReportFraud.ftc.gov or at 1-877-FTC-HELP to report suspected fraud, which helps the FTC identify patterns and bring enforcement actions. Additionally, consumers may want to consult with a consumer protection attorney about potential legal options.
There is a press release on the FTC’s website how about Complete Merchant Solutions annd its former CEO (Jack Wilson) was forced to pay $1.5 million to settle these charges of helping helping to steal more than $90 million : https://www.ftc.gov/news-events/news/press-releases/2020/12/payment-processor-its-former-ceo-pay-15-million-settle-ftc-charges-they-facilitated-fraud
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