FTC and Seven States Sue Payment Processor

The FTC announced on December 11, 2007, that it along with seven state attorneys general filed suit in federal court against Your Money Access, LLC, a payment processor and its principals with violating federal and state laws by debiting, or attempting to debit from consumers' bank accounts on behalf of alleged fraudulent telemarketers and Internet-based merchants. The FTC and the attorneys general of Illinois, Iowa, Nevada, North Carolina, North Dakota, Ohio, and Vermont have charged the defendants with offering payment processing services to a variety of telemarketing and Internet based merchants. The government filed the action even though it alleged that the processor had ceased payment processing operations in December 2006. The government charged that the high return rate put the company on notice that the underlying transactions were invalid, as well as its review of sales materials. The action is particularly noteworthy for the government's pursuit of a supplier for conduct beyond telemarketing. In particular, the FTC has included as part of its case, YMA's processing of Internet merchants under the unfairness prong of Section 5 of the FTC Act, with similar state-based claims asserted on behalf of the individual state attorneys general.

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