FTC, seven states, say payment processor took millions with Internet, telemarketing schemes

The Federal Trade Commission and seven states have charged a payment processor with violating federal and state laws by debiting, or attempting to debit from consumers’ bank accounts on behalf of numerous fraudulent telemarketers and Internet-based merchants.

Between June 23, 2004 and March 31, 2006, the payment processing company, Your Money Access, processed more than $200 million in debits and attempted debits to consumers’ bank accounts and more than $69 million of the attempted debits were returned or rejected by consumers or their banks for various reasons, indicating the lack of consumer authorization,  the FTC complaint alleges.

In many instances, after the defendants debited accounts, the merchants failed to deliver the promised products or services, or sent consumers relatively worthless items. The complaint alleges that by providing access to the banking system and the means to take money from consumers’ bank accounts, the defendants played a critical role in their clients’ fraudulent and deceptive schemes. 

Basically the FTC and the  states claim after consumers gave account information over the phone or on the Internet, scammers then sent it to Your Money Access for processing.

The FTC says Your Money Access knew it was dealing with merchants that were out to deceive consumers.The FTC also named as defendants in the case: LLC d/b/a Netchex Corp., Universal Payment Solutions, Check Recovery Systems, Nterglobal Payment Solutions, Subscription Services, Ltd.; YMA Company, LLC, and officers Derrelle Janey, and Tarzenea Dixon.

The seven states in the suit include Illinois, Iowa, Nevada, North Carolina, North Dakota, Ohio, and Vermont.

The complaint charges the processing companies with violating Section 5 of the FTC Act by unfairly processing debit transactions to consumers’ bank accounts, and violating the Telemarketing Sales Rule (TSR) by providing substantial assistance or support to sellers or telemarketers who they knew, or consciously avoided knowing, were violating the TSR.

The complaint also charges them with violating a variety of state laws as well. The complaint also states that in many cases the defendants accepted clients whose applications contained signs of deceptive activity, including sales scripts with statements that were facially false or highly likely to be false.

In addition, the FTC alleges that the defendants anticipated that many of their clients would generate high rates of returned or reversed transactions, a sign that unauthorized debits from consumers’ accounts were likely, the FTC said. After these merchants became Your Money Access clients, they did generate high return rates – from 20 to more than 80%. According to the complaint, Your Money Access closely monitored its clients’ return rates, and therefore was aware of its clients’ high return rates.The FTC complaint is not a finding or ruling that the defendants have violated the law. The case will be decided by the court.

The FTC has been busy in the online world recently. Last week today settled federal charges against AdultFriendFinder.com saying the organization can no longer pelt unwitting consumers with sexually explicit pop-up ads.

The agency also last month announced a law enforcement crackdown on companies and individuals accused of violating the requirements of the National Do Not Call (DNC) Registry, resulting in six settlements collectively imposing nearly $7.7 million in civil penalties. 

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