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Senior Citizen Alerts
Senior Citizens Should be Wary of Prepaid Credit
Cards Sold Online
FTC gets judge to shut down operation for
unauthorized debiting bank accounts
 Aug. 7, 2007 – Senior citizens should by wary of
operations marketing prepaid Visa and MasterCard, primarily on the
Internet. At the request of the Federal Trade Commission, a federal
judge has halted the operations of at least one of these companies that
was making unauthorized debits from consumers’ bank accounts.
According to a complaint filed by the FTC, the
defendants market bank-issued, Visa and MasterCard prepaid cards under a
variety of names through Web sites and pop-up and e-mail advertisements
that direct consumers to Web sites for the individual cards.
These include Acclaim Visa, Impact Visa, Sterling
Visa, VIP Advantage Visa, Vue Visa, Elite Plus MasterCard, Impact
MasterCard, Secure Deposit MasterCard, VIP MasterCard, and Vue
MasterCard. The defendants also market unrelated short-term loans on Web
sites such as
www.SuperAutoSource.com,
www.SuperCashSource.com, and
www.FastCashUSA.com.
The complaint alleges that, through their prepaid
card programs, the defendants debited, without authorization, a $159.95
“application and processing” fee from consumers’ bank accounts,
including from consumers who either had no contact with the defendants
or had applied for an unrelated short-term loan.
Consumers who visited the defendants’ prepaid card
Web sites were instructed to provide personally identifiable
information, including their bank account information, to apply for a
card.
The defendants allegedly also made deceptive claims
on their Web sites, such as “No Annual Fees” and “No Security Deposit,”
without disclosing clearly and prominently that they would use the
consumers’ personal information to debit the $159.95 fee. Consumers
usually discovered the unauthorized debits when they reviewed their bank
account statements or when banks notified them of penalty fees or
overdraft charges due to insufficient funds.
The defendants are charged with violating federal
law by engaging in unauthorized bank account debiting; failing to
disclose clearly and conspicuously that consumers’ personal information
will be used to debit a fee from their bank accounts, and that the fee
will be debited once they apply for a prepaid card; and misrepresenting
that consumers are obligated to pay the fee when they did not consent to
pay a fee.
On July 30, the judge issued a temporary
restraining order barring unauthorized debiting and freezing the assets
of EdebitPay, LLC, EDP Reporting, LLC, EDP Technologies Corporation,
Secure Deposit Card Inc., Dale Paul Cleveland, and William Richard
Wilson, all based in California.
The judge will hold a hearing to determine whether
to extend the injunction pending a trial. The FTC will seek to
permanently bar the defendants from further violations and make them
forfeit their ill-gotten gains.
By a 5-0 vote, the Commission approved the filing
of the complaint in the U.S. District Court for the Central District of
California.
NOTE: The Commission files a complaint when it has
“reason to believe” that the law has been or is being violated, and it
appears to the Commission that a proceeding is in the public interest.
The complaint is not a finding or ruling that the defendant has actually
violated the law. The case will be decided by the court.
The FTC works for the consumer to prevent
fraudulent, deceptive, and unfair business practices and to provide
information to help spot, stop, and avoid them. To file a complaint in
English or Spanish, click
http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The
FTC enters Internet, telemarketing, identity theft, and other
fraud-related complaints into Consumer Sentinel, a secure, online
database available to more than 1,600 civil and criminal law enforcement
agencies in the U.S. and abroad. For free information on a variety of
consumer topics, click
http://ftc.gov/bcp/consumer.shtm.
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