By Edward Marshall and Megan Mitchell ( May 17, 2017, 12:26 PM EDT) -- Operation Choke Point continues to cast an ominous cloud over the payments industry. Regulatory enforcement actions against payment processors, spearheaded principally by the Federal Trade Commission and the Consumer Financial Protection Bureau, have sought draconian sanctions against defendants that allegedly ignored "red flags" suggesting that the merchants they serve were engaged in consumer fraud. Indeed, citing high transaction reversals, consumer complaints, and concerns articulated by financial institutions or the card brands, government agencies have filed lawsuits that attempt to recoup the entire monetary value of transactions conducted by "bad" merchants from payment processors and independent sales organizations, or ISOs (i.e., not "only" disgorgement of processing fees). Given that degree of exposure, coupled with the specter of invasive injunctive relief, most defendants have opted to settle rather than fight. The downside risk of doing battle with the government is, perhaps understandably, just too great....