Five states have reached a settlement with AmeriNet, Inc., which was accused of processing fraudulent or unlawful sales for telemarketers. The Lake Oswego, Oregon, company did not have direct contact with consumers but was responsible for processing payments from consumers' bank accounts on behalf of telemarketers.
A company hired by a business to complete a consumer transaction is responsible for making sure the payments being processed are for legitimate goods and services sold according to consumer law, said Ohio Attorney General Jim Petro.
I encourage payment processing companies to know the exact nature of a telemarketers business before they agree to provide services for them to make sure they are abiding by state and federal laws. Businesses cant plead innocent just because they are a third party entity in the consumer transaction, Petro said.
Petro alleged that AmeriNet was liable for debits it processed to consumers bank accounts on behalf of telemarketers who acted unlawfully, and that the company:
• processed demand drafts (unsigned checks) without prior written authorization from consumers, as required by Ohio law;
• processed electronic debits based on first-time outbound (cold) telemarketing calls, in violation of interbank rules;
• processed debits from consumers banks without the consumers having received their legally-required three-day right to cancel the transaction; and
• processed debits that were not authorized by the account holders.
The issue was brought to the attention of the attorney generals because up to 80% of the debits processed by AmeriNet on behalf of some telemarketers were disputed by consumers who indicated that those debits were the result of fraudulent telemarketing sales.
Despite the high return rate, AmeriNet continued to provide check processing services for the telemarketers.
To settle the case, AmeriNet agreed, among other things, to:
• Provide a full refund on the request of any consumer whose bank account has been debited by AmeriNet on behalf of a telemarketer or a seller over the Internet. Any refund will include a letter advising the consumer of the dangers of unauthorized bank debits.
• Pay $10,000 each to the States of Ohio Florida, Illinois, North Carolina, and Vermont -- an amount conditioned on the accuracy of financial information provided to the States by AmeriNet.
• Cooperate with the States in providing information on telemarketers, processors and others.
• Refrain from processing bank debits in connection with the offer or sale of high-risk goods or services, including credit repair, advance-fee loans or credit cards, offers to reduce telemarketing calls, recovery of money lost to fraud, discount membership clubs, identity theft services, and government grants or loans.
• Refrain from processing demand drafts without the consumers prior written authorization.
• Undertake extensive pre-screening before providing bank processing services, and refrain from processing for any company that fails to provide information for pre-screening.
• Monitor return rates, and investigate the cause of any rate above 3 percent in a day, and of any rate of unauthorized returns above .2 percent in a day.
