The chief executive officer of a payment processing company will be banned from the business as part of a settlement resolving Federal Trade Commission charges that the company illegally debited millions of dollars in bogus charges from consumers bank accounts.
In 2007, the FTC charged the executive, Tarzenea Dixon, her company, and others with processing unauthorized debits on behalf of deceptive telemarketers and Internet-based schemes they knew, or deliberately avoided knowing, were violating the FTCs Telemarketing Sales Rule. In addition, the attorneys general of Illinois, Iowa, Nevada, North Carolina, North Dakota, Ohio, and Vermont charged the defendants with violating various state laws.
The settlement frees up about $2.8 million that will be paid to victims of the company.
"It is always unfortunate when consumers fall victim to the many financial predators and schemes that are out there," said Ohio Attorney General Richard Cordray. "However, today we have a good story to tell. We were not only able to track down the predators, but the victims will receive restitution. These cases are tough on everyone, but thanks to the strong efforts of the many state and federal agencies involved, this one is a success story."
According to the FTC complaint, the company played a critical role in helping many of its clients carry out these illegal schemes by providing access to the banking system and the means to extract money from consumers bank accounts.
Between June 23, 2004, and March 31, 2006, the defendants processed more than $200 million in debits and attempted debits. More than $69 million of the attempted debits were returned or rejected by consumers or their banks for various reasons, an indication that in many cases consumers had never authorized the charges. In many instances, the merchants either failed to deliver the promised products or services or sent consumers relatively worthless items.
The settling defendant is Tarzenea Dixon. Her co-defendants are Your Money Access, LLC d/b/a Netchex Corp., Universal Payment Solutions, Check Recovery Systems, Nterglobal Payment Solutions, and Subscription Services, Ltd.; YMA Company, LLC; and Derrelle Janey.
In addition to permanently banning Dixon from any payment processing, the settlement order bans her from substantially aiding any marketer when she knows, or consciously avoids knowing, that it is violating the Telemarketing Sales Rule. The order imposes a $22 million judgment that is stayed based on her inability to pay. The full judgment will become due immediately if she is found to have misrepresented her financial condition.
Meanwhile, litigation against Janey continues. On October 28, 2008, the court entered a default judgment against the corporate defendants, Your Money Access, LLC and YMA Company, LLC, barring them from payment processing for any client whose business practices are deceptive, unfair, or abusive within the meaning of the FTC Act, the Telemarketing Sales Rule, and the state consumer protection laws. The case was part of the FTCs Operation Tele-PHONEY telemarketing fraud law enforcement sweep announced in May 2008.
In December 2008, the FTC announced a settlement between the Office of the Comptroller of the Currency and Wachovia Bank, N.A. to issue more than $150 million in redress checks to victims of telemarketing fraud. The checks reimbursed consumers for funds deducted from their accounts by three payment processors that maintained accounts with Wachovia, including Your Money Access.