On June 16, the Federal Trade Commission announced a $5 million settlement with Paddle.com Market Ltd., a London-based merchant-of-record platform, and its U.S. subsidiary. The settlement resolves allegations that Paddle facilitated fraudulent tech-support telemarketing scams that targeted U.S. consumers, including many older adults.

According to the FTC complaint, Paddle provided payment processing infrastructure that allowed deceptive third-party tech-support operations, primarily based overseas, to access U.S. banking networks. The FTC alleges that Paddle misrepresented or obscured the nature of the underlying transactions, helping high-risk merchants bypass fraud monitoring systems used by credit card networks and acquiring banks.

Paddle also allegedly failed to screen or terminate merchants with excessive chargeback rates—some reportedly over 20%, far above the industry standard threshold of 1%. Consumers were often charged for services they never received or did not authorize.

As part of the settlement, Paddle is permanently banned from processing payments for any company selling tech-support services via telemarketing. The company must also implement enhanced merchant screening and transaction monitoring procedures and is subject to ongoing compliance oversight.

The FTC did not accuse Paddle of directly operating scams, but rather of acting as a key facilitator by providing the infrastructure that allowed deceptive actors to collect payments from U.S. consumers. The $5 million settlement amount will be used for consumer redress, but the agency did not disclose how that figure was calculated.

Who Is Paddle?

Paddle operates as a merchant of record (MoR), meaning it acts as the official seller of record for its clients and handles payments, tax compliance, fraud management, subscription billing, and related back-office operations. The platform is designed for SaaS, digital products, and app-based businesses.

Founded in London, Paddle has raised more than $290 million in venture capital and was last valued at approximately $1.4 billion following a $200 million Series D round. The company claims to serve more than 6,000 software businesses globally and processes over 120 million transactions per year.

In 2022, Paddle acquired U.S.-based subscription analytics company ProfitWell for a reported $200 million, significantly expanding its footprint and capabilities in the subscription economy.

INSIDER TAKE

This enforcement action isn’t just about a single platform; it’s a clear warning to the broader payments and subscription infrastructure ecosystem. By targeting Paddle, the FTC is sending a clear message: providers who aggregate payments for high-risk merchants, particularly those that obscure transaction details, will be held accountable.

For subscription platforms, especially those using the merchant-of-record model, the case underscores the importance of merchant vetting, transparent transaction labeling, and strict adherence to card network rules around fraud and chargebacks.

While Paddle’s core business serves legitimate SaaS and digital subscription clients, this case reveals how deceptive operators can exploit the same infrastructure if controls are lacking. The ban on processing tech-support payments may not directly impact Paddle’s mainstream subscription clients, but the reputational and regulatory fallout could influence how enterprise buyers evaluate payment partners moving forward.

More broadly, this case is part of a growing pattern of FTC enforcement targeting intermediaries who enable unfair or deceptive practices. With dark patterns, “junk fees,” and payment transparency already on the agency’s agenda, payment platforms and subscription vendors should expect increased scrutiny and adapt their compliance practices accordingly.