Payment processor that attempted $200 million of bogus charges fined $3.6 million

FTC logoA payment processor that illegally debited more than $200 million in charges from consumers' bank accounts in a massive nationwide scam has been fined $3.6 million, says the Federal Trade Commission.

According to a December 2007 complaint filed by the FTC and seven states, Your Money Access, LLC and its subsidiary, YMA Company, LLC, processed unauthorized debits on behalf of deceptive telemarketers and Internet-based schemes in violation of the FTC's Telemarketing Sales Rule and state consumer protection laws. The states joining the FTC's complaint were Illinois, Iowa, Nevada, North Carolina, North Dakota, Ohio, and Vermont.

Defendants included Your Money Access, LLC d/b/a Netchex Corp., Universal Payment Solutions, Check Recovery Systems, Nterglobal Payment Solutions, Subscription Services, Ltd.; YMA Company, LLC, Derrelle Janey, and Tarzenea Dixon.

Between June 2004 and March 2006, the complaint charged, Your Money Access processed more than $200 million in bogus and attempted debits to consumers' bank accounts. More than $69 million of the attempted debits were returned or rejected by consumers or their banks for various reasons, underscoring the fact that consumers never authorized them.

Once a consumer's account was debited, merchants often failed to deliver promised products or services, or sent consumers relatively worthless items. The complaint alleged that by providing access to the banking system and the means to extract money from consumers' bank accounts, Your Money Access played a critical role in their clients' fraudulent and deceptive schemes.

"Payment processors play a key role in many commercial transactions, and they are positioned to monitor return rates on these transactions," said Lydia Parnes, Director of the FTC's Bureau of Consumer Protection, in a 2007 statement. "The defendants purportedly saw extremely high return rates and looked the other way. We allege that consumers lost millions of dollars as a result, and that the company's conduct violated federal and state laws."

Florida-based Your Money Access field for Chapter 7 bankruptcy in March 2008, after the FTC barred it from processing payments for any client whose business practices were deceptive, unfair, or abusive under the FTC Act, the Telemarketing Sales Rule, and state consumer protection laws.

Many victims maintained accounts with Wachovia Bank (now owned by Wells Fargo), which debited the accounts of victims defrauded by Your Money Access and two other payment processors. Under a December 2008 settlement, Well Fargo agreed to reimburse swindled consumers more than $150 million.

In March of this year, Your Money Access CEO Tarzenea Dixon was banned for life from the payment processing business under a settlement resolving FTC charges. She was also fined $22 million, which was waived due to her inability to pay. The company's president, Derrelle Janey, was also banned from the business and paid a $15,000 fine in a separate settlement in September.

The case was part of the FTC's "Operation Tele-PHONEY" telemarketing fraud law enforcement crackdown announced in May 2008.
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