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FTC Sues Payment Processor For Fake Transactions

Company's Clients Include PharmacyCards.com

By Martin H. Bosworth
ConsumerAffairs.com

January 8, 2007

PharmacyCard.com • FTC Sues Payment Processor InterBill For Fake Transactions • Online Payment Processor Settles FTC Charges • Bogus Pharmacy Card Scam Hit Thousands --- • Scam Alerts

The Federal Trade Commission (FTC) has filed a lawsuit against a Nevada payment processing company for enabling a rip-off scheme that stole millions of dollars from consumers via unauthorized debits from their checking account.

The FTC suit alleges that InterBill Ltd. processed transactions on behalf of "Pharmacycards.com," a fake company that claimed to offer discount pharmacy prescription cards.

The owners of Pharmacycards.com provided Interbill with checking account numbers from consumers, which Interbill then used to process debit charges of $139 -- all without the consumer's knowledge or consent.

InterBill makes most of its money from "high risk" industries, such as online gambling, direct marketing, and adult video services.

The company had numerous procedures in place to conduct investigations of the companies it does business with, but the FTC lawsuit claims that InterBill failed to properly investigate the true nature of PharmacyCards.com.

Even after PharmacyCards and InterBill received numerous complaints about the false charges, InterBill continued to process transactions for their partners, the FTC stated. The company ended up successfully processing 30 percent of the fraudulent transactions through offshore corporations, pocketing a cool $2.38 million.

The FTC has charged InterBill's head, Thomas Wells, with violating Section 5 of the FTC Act, which prohibits deceptive acts or practices in marketing. Wells is also accused of failing to perform due diligence in investigating Pharmacycards before providing it with payment services.

"Wells ... neither asked for nor checked business or individual reference," the FTC complaint states. "He did not request or review information about the business' operations ... He did not verify a physical address for individuals or the company."

The FTC is suing for a total of $9.9 million, plus legal costs, and seeks a permanent injunction against InterBill. The InterBill suit is nearly identical to a complaint against Universal Processing, Inc., another processing company that handled transactions for PharmacyCards.com.

Universal Processing settled its lawsuit with the FTC in September 2005, returning all the money it had received from processing the fake transactions and agreeing to strictly monitor all transactions it processes for fraud, as well as regularly submitting to audits to ensure it stayed aboveboard.

At the time, the agency said there may be as many as 15,000 consumers who have not filed claims for damages from the Pharmacycards.com scam.

The FTC is urging anyone who may have been affected by the scam to file a complaint online using the complaint form on the FTC Web site, or by calling 1-877-FTC-HELP.

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