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FTC Says Payment Processor Took Millions
coondoggie writes "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 2004 and March 2006, the payment processing company, Your Money Access, processed more than $200 million in debits and attempted debits to consumers' bank accounts. 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."
The question I have is how do I know who is processing the charge even if I know I am being charged ?
It shouldn't take that long to find out fraud is going on with a company with a charge-back rate higher then 25%. Why the heck wouldn't the credit cards cut off the tap and mitigate their damages? It seems sort of foolish to me.
"I don't necessarily agree with everything I say." - Marshall McLuhan
In general, I think the answer is that you don't . . . but the banks and the Feds do, and you can bet they keep records and track trends. Nearly 35% unauthorized charges implies that perhaps this processor is specifically courting fraudulent businesses, and is at the least not doing whatever vetting and verifying it's supposed to be.
"There are four boxes to use in the defense of liberty: soap, ballot, jury, ammo. Use in that order." - Ed Howdershelt
The title of this article made me, for the first time in my entire life, notice that "took" is a really weird word.
I'm not sure about in America but here in Australia if someone tried to debit money from your account and it fails YOU the account holder get slugged a fee.
I wonder if this was the case for all the failed unauthorized attempts...?
"Consider how lucky you are that life has been good to you so far. Alternatively, if life hasn't been good to you so far
>> If you don't know what you are talking about why not just shut the fuck up?
wow, you're just a big meanie... digg.com is calling you.
When Apple Computer made a fraudulent charge to my debit card, it only took a phonecall to the bank and a mailing in of the form they sent me (postage already paid on the response envelope they sent me by the way). Sure enough, the money was gone from my account but it was back within 48 hours from picking up the phone, and of those 48 hours I spent 10 minutes actively working on the case. Not a lot of time spent, and no other resources spent except the ink for the form and the saliva for the envelope.
Defendants withdrew funds from consumers' bank accounts in one of two ways: by electronically debiting consumer bank accounts through the Automated Clearing House Network or by submitting checks and falsely representing that the consumers had approved them.
See http://www.allamericanpatriots.com/48738769_illinois-ag-madigan-joins-six-states-ftc-suit-stop-florida-company-fraudulent-debits
So this is a case of direct taking from accounts or use of fradulenet checks. That is why no Credit Card company raised an alarm, they were not even in the loop
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It seems some people are confused about the nature of the Automated Clearing House, and making very odd assumptions. Since some of this is due to a conflict in terminology, hopefully I can clear this up. ACH is a big network. You might say it's really a collection of protocols and legal policies that allow banks and credit card companies to talk to each other. Every time you use your debit card in a non-branch office (like a Wells Fargo card in a Bank of America ATM), you're using ACH. Now, I'm going to skip the in-depth network topology and give you the highlights. In short, the entire setup consists of Vendors attached to a Payment Processor , which are attached to ACH, which is responsible for routing a transaction from one ACH member to a Financial Institution (like a bank or credit card company). Vendor->Payment processor->ACH->Financial Institution. Now, why not have the Vendor connect to the FI directly? Well, each vendor would need a connection for every card. As in physical lines. That makes it expensive for everyone, and hit-or-miss for the consumer - what if they don't support YOUR card? Okay, so, why not have the vendor connect to the ACH directly? Well, when you make a transaction on the ACH, there's no additional security. Basically, it's assumed that you have the authority to make the transaction, or you wouldn't be doing it. Imagine getting a credit card scanner and service for like 300$, quickly making several hundred thousand in fraudulent charges, and skipping the country. Generally speaking, you need to be an established business with accountability to be allowed to connect to the ACH - and that's where payment processors come in. Oh, and quick terminology lesson. In ACH parlance: A debit means "take money from an account" A credit means "put money into an account" They have nothing to do with credit cards, or debit cards, or anything of the sort. Payment Processors, usually make money per transaction, or per connection time. Either way though, they profit from vendor transactions whether valid or not, so there's a good incentive to 'look the other way' with problem vendors. So, this payment processor was following all the rules, but they're charging it as sort of an accessory to criminal acts by their customers. The states are saying that they knew these were invalid debits, but they processed them anyway, just to make money. Technically it would be the vendors that have to suffer here, but the states are trying to hit every target they can, especially when busting a little work-out-of-your-house-2000$-laptop-scammer is not worth the money spent sending them to trial.