The US Federal Trade Commission (FTC) has filed charges against payment processing company Your Money Access (YMA) which has been accused of attempting to debit customers' bank accounts on behalf of fraudulent telemarketers and online merchants.
The FTC, which filed the complaint with seven US states - Illinois, Iowa, Nevada, North Carolina, North Dakota, Ohio and Vermont - claims YMA offered payment processing services to a variety of merchants, many of which were engaged in deceptive schemes.
Between June 2004 and March 2006, YMA processed more than $200 million in debits and attempted debits to consumers' bank accounts, says the FTC. But more than $69 million of the attempted debits were returned or rejected by consumers or their banks for various reasons, indicating a lack of consumer authorisation, the complaint alleges.
In many cases the defendant accepted clients whose applications contained signs of deceptive activity, including sales scripts, says the FTC.
It is reported that YMA went by several names - including Netchex Corp, Universal Payment Solutions, Check Recovery Systems, Nterglobal Payment Solutions and Subscription Services - all of which are named as defendants in the suit, along with YMA executives Derrelle Janey and Tarzenea Dixon.
The complaint also alleges that YMA anticipated that many of its clients would generate high rates of returned or reversed transactions - a sign that unauthorised debits from consumers' accounts were likely. After these merchants became YMA clients, they did generate high return rates - from 20% to more than 80%.
"Payment processors play a key role in many commercial transactions, and they are positioned to monitor return rates on these transactions," says Lydia Parnes, director of the FTC's Bureau of Consumer Protection. "The defendants purportedly saw extremely high return rates and looked the other way. We allege that consumers lost millions of dollars as a result, and that the company's conduct violated federal and state laws."