BUFFALO – Attorney General Eric T. Schneiderman today announced that his office has reached a settlement of $71,640 with New Beginnings NY, Inc., a payment processor located in Cheektowaga, and its owner, Kenneth Newton, to provide restitution to customers paid for and never received identity theft protection from Phoenix Trust. New Beginnings NY, Inc. had served as Phoenix Trust’s payment processor. A payment processor is an entity that, for a fee, processes, verifies, and accepts or declines credit card transactions on behalf of a business when customers pay for a service or product online or over the telephone.
“Mr. Newton allowed scam artists to prey upon innocent consumers who were, in fact, trying to ensure their financial security, violating their trust and taking their hard-earned money,” Attorney General Schneiderman said. “This settlement sends the clear message that businesses that process payments for scam artists will be held accountable.”
Newton operated New Beginnings as a payment processing company, electronically withdrawing funds from bank accounts and depositing them into another account as payment for a service or product. According to Newton, he provided payment services to a company called Phoenix Trust from June 26, 2013, to July 11, 2013. Newton stated that it was his understanding that Phoenix Trust was selling identity theft protection for $398 to consumers.
According to Newton, Phoenix Trust would give him a spreadsheet with the names and bank routing numbers of consumers that it said it sold the kits to. Newton would then create a physical check for $398 with the consumer’s bank account information on it and deposit the checks in his account, then transmit payment to Phoenix Trust after taking a commission. However, in reality, Phoenix Trust failed to provide identity theft protection, and consumers received nothing in return for the $398 deducted from their accounts.
As a result of the settlement, Newton is required to pay $71,640, which will provide complete restitution to defrauded consumers. Newton is also required to shut down his payment processing company as well as a company called Ironwood Management Group, which collected on consumer debt.