A company that marketed Visa- and MasterCard-branded prepaid debit cards to subprime consumers has agreed to settle Federal Trade Commission charges that it made unauthorized debits from consumers bank accounts and engaged in deceptive marketing practices.
The settlement requires EdebitPay, LLC, EDP Reporting, LLC, EDP Technologies Corporation, Secure Deposit Card, Inc., Dale Paul Cleveland, and William Richard Wilson, all located in Los Angeles, to pay $2,258,258 for consumer redress, plus the proceeds from the sale of an automobile.
In addition, Dale Paul Cleveland must pay taxing authorities an additional $667,288.
According to the FTCs complaint, the defendants marketed bank-issued prepaid debit cards under a variety of names through Web sites and pop-up and e-mail advertisements that directed consumers to sites for the individual cards (including Acclaim Visa, Impact Visa, Sterling Visa, VIP Advantage Visa, Vue Visa, Elite Plus MasterCard, Impact MasterCard, Secure Deposit MasterCard, VIP MasterCard, and Vue MasterCard).
They also marketed unrelated short-term loans on Web sites such as www.SuperAutoSource.com and www.SuperCashSource.com.
The complaint also contends that, among other things, the defendants debited, without authorization, a $159.95 application and processing fee from consumers bank accounts, including from consumers who did not submit an online application for the prepaid cards or who had applied for an unrelated short-term loan.
Under the proposed settlement, the defendants are prohibited from debiting a consumers account or causing billing information to be submitted for payment without first obtaining the consumers express informed consent.
The order also prohibits the defendants from misrepresenting any fact material to a consumers decision to apply for or purchase any product or service.
In addition, it requires them to disclose clearly and conspicuously certain material information before a consumer applies for or purchases any product or service, such as any charge that will be assessed against the consumers bank account; any method that will be used to debit the account; that the consumers personally identifiable information will be used to debit the account; that such information will be sold or transferred to third parties for marketing purposes; the material attributes of the product or service being offered; and, if a representation is made about a refund or cancellation policy, a statement of all material terms and conditions of the policy.