On September 8, 2026 the Federal Trade Commission announced a proposed stipulated order against payment processor 5967 Ventures, LLC, doing business as Humboldt Merchant Services, requiring a $12 million payment and permanently barring the company from processing for merchants with a heightened risk of fraud. The order was filed the same day in the U.S. District Court for the Eastern District of Michigan; the Commission vote to approve was 2-0. Humboldt neither admits nor denies the allegations.

Why It Matters

Payment processing is the single most persistent operational constraint on the pleasure products and adult content business, and it operates through a small number of specialist processors willing to underwrite "high-risk" merchant codes. When one of those specialists is fined $12 million and permanently barred from the high-risk category, the practical effect is fewer doors for legitimate sexual wellness merchants — not because they did anything wrong, but because they share an MCC with the merchants the FTC was actually chasing. The compliance schedule in this order is the more durable outcome. The 1%-in-two-of-six-months chargeback trigger, six months of processing history, Principal Verification Calls and the off-network website review are now an enforcement-blessed standard that other processors will adopt preemptively to avoid becoming the next defendant. Subscription-heavy sextech businesses — device subscription boxes, creator platforms, supplement auto-ship, telehealth refills — all run negative-option billing with chargeback profiles that this framework treats as presumptively suspect. The strategic read for operators: clean processing history, a real business address and documented consent flows have moved from good hygiene to table stakes for keeping an account open. Anyone currently onboarding with a specialist processor should expect a materially longer underwriting process from here.

The FTC's complaint alleges Humboldt processed payments for more than 1,000 merchants that were shell entities fronting for fraudulent companies engaged in unauthorized billing scams — including Legion Media, which the FTC shut down in 2024. Per the complaint, those sham accounts typically incurred chargebacks at rates nearly ten times what the card brands consider excessive, and Humboldt allegedly moved them onto a lower-risk bank BIN licensed by an affiliated entity to improve transaction approval odds. "Humboldt was processing payments for companies despite red flags indicating they were scamming consumers," said Katherine White, Deputy Director of the FTC's Bureau of Consumer Protection.

The prohibitions are what matter for this industry. Beyond the $12 million, the order permanently bans credit card laundering and bars Humboldt from processing for four merchant categories: straw companies; merchants on the Mastercard MATCH list for excessive chargebacks, laundering or fraud; merchants previously named as defendants in a consumer fraud action by the FTC, another federal agency or a state AG; and e-commerce entities using third-party mailbox providers as their only business location that also use negative-option billing, are new, or lack processing history.

It also imposes an ongoing compliance regime that reads like a template. For "covered clients" — e-commerce-only merchants offering negative-option products, merchants with no processing history, or recently formed entities — Humboldt must collect marketing materials and URLs, verify business addresses, review six months of prior processing statements and chargeback rates, and conduct Principal Verification Calls. Monitoring obligations include website reviews from IP addresses not associated with the company, monthly chargeback calculations, and mandatory investigation and possible termination when a client exceeds a 1% chargeback rate in two of the past six months with more than 50 chargebacks in a month.

Note the trading name buried in the corporate entity: 5967 Ventures. MCC 5967 is the inbound-telemarketing/direct-marketing code that has long been the catch-all for adult and other "high-risk" merchants. Humboldt has been one of the long-standing processors serving categories that mainstream acquirers won't touch.

Sources

Update — 2026-09-13

Initial entry — story first created.