FTC charges payment company in $200M fraud

by Jeremy Kirk

December 12, 2007 —

The U.S. Federal Trade Commission has filed charges against a payment processing
company, accusing it of attempting to debit consumers' bank accounts for up
to $200 million on behalf of dishonest merchants.

Those consumers either never received the goods or received worthless items,
said the FTC, which filed the complaint with seven other U.S. states. The payment
company allegedly violated both federal and state consumer fraud laws, telemarketing
rules and FTC regulations regarding the unfair processing of payments.

The payment processing company went by several names, which are listed in a
FTC news release.
The FTC alleges the company processed payments for fraudulent telemarketers
and Internet-based merchants that used deceptive sales scripts and methods.

About $69 million of the $200 million in transactions were either rejected
by consumers or returned because of lack of proper payment authorization, the
FTC said.

The FTC wants to refund consumers and force the company to forfeit money it
still holds from the fraud in addition to other civil penalties. The complaint
was filed in the U.S. District Court for the Eastern District of Pennsylvania.

The states that have joined the suit are Illinois, Iowa, Nevada, North Carolina,
North Dakota, Ohio and Vermont.

IDG News Service