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Posted in Consumer & Class Action Blog, General Blog

FTC lawsuit halts unauthorized debits regarding pre-paid stored-value cards

August 16th, 2007 by Erich Vieth

On July 30, a U.S. District Court judge has issued an injunction barring commercial entities from marketing Visa- and MasterCard-branded stored-value cards that have allowed them to make unauthorized debits from the consumers’ bank accounts.

 

These bank-issued Visa- and MasterCard-branded stored-value (prepaid) cards were sold under a variety of names, according to the FTC.  They were sold

 

through Web sites and pop-up and e-mail advertisements that direct consumers to Web sites for the individual cards. These include Acclaim Visa, Impact Visa, Sterling Visa, VIP Advantage Visa, Vue Visa, Elite Plus MasterCard, Impact MasterCard, Secure Deposit MasterCard, VIP MasterCard, and Vue MasterCard. The defendants also market unrelated short-term loans on Web sites such as www.SuperAutoSource.com, www.SuperCashSource.com, and www.FastCashUSA.com.

 

The FTC alleged that the defendants debited a $159.95 “application and processing” fee from consumers’ bank accounts without authorization.  The victims included

 

consumers who either had no contact with the defendants or had applied for an unrelated short-term loan. Consumers who visited the defendants’ prepaid card Web sites were instructed to provide personally identifiable information, including their bank account information, to apply for a card. The defendants allegedly also made deceptive claims on their Web sites, such as “No Annual Fees” and “No Security Deposit,” without disclosing clearly and prominently that they would use the consumers’ personal information to debit the $159.95 fee. Consumers usually discovered the unauthorized debits when they reviewed their bank account statements or when banks notified them of penalty fees or overdraft charges due to insufficient funds.

 

For more information, see the FTC press release.

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