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FTC Says Payment Processor Took Millions 120

coondoggie writes "The Federal Trade Commission and seven states have charged a payment processor with violating federal and state laws by debiting, or attempting to debit, from consumers' bank accounts on behalf of numerous fraudulent telemarketers and Internet-based merchants. Between June 2004 and March 2006, the payment processing company, Your Money Access, processed more than $200 million in debits 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, indicating the lack of consumer authorization, the FTC complaint alleges."
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FTC Says Payment Processor Took Millions

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  • With most merchant accounts offering 99% approval rates, if your company falls in the other 1%, it probably can't accept cards anyway (due to the type of business or other factors, or you're just plain shady). I feel bad for the people defrauded by the merchants who used this processor. :(
    • Re: (Score:2, Informative)

      by thebear05 ( 916315 )
      The question I have is how do I know who is processing the charge even if I know I am being charged ?
      • Re: (Score:2, Insightful)

        by GwaihirBW ( 1155487 )
        In general, I think the answer is that you don't . . . but the banks and the Feds do, and you can bet they keep records and track trends. Nearly 35% unauthorized charges implies that perhaps this processor is specifically courting fraudulent businesses, and is at the least not doing whatever vetting and verifying it's supposed to be.
  • by RattFink ( 93631 ) on Wednesday December 12, 2007 @04:02AM (#21668447) Journal
    It shouldn't take that long to find out fraud is going on with a company with a charge-back rate higher then 25%. Why the heck wouldn't the credit cards cut off the tap and mitigate their damages? It seems sort of foolish to me.
    • Re: (Score:3, Informative)

      by GwaihirBW ( 1155487 )
      Well, it is kinda tiny in credit-company terms . . . $100 mil in a year is a drop in the bucket. Size probably kept it off the priority list, even if the rate did blip their radar. Now with a two year record, it's a really solid case to bring, creating a nice precedent-hammer to expedite further such cases and scare similar operators out of the business.
    • by deniable ( 76198 ) on Wednesday December 12, 2007 @04:10AM (#21668483)
      Well, the summary seems to say that the merchants in this case were scammers. The feds may have wanted to back-trace / follow the money. It probably also took time to collect enough evidence for the case to proceed while not tipping off the accused.
    • Re: (Score:3, Informative)

      by Anonymous Coward
      You mean the credit card companys that scammed us all for the last 10 years on forigen exchange rates and finally got caught on that themselves?

      (Oh yeah... Get your share of the settlement. at least $25 of it anyway. the lawyers will get most of it.)

      So these people scamming us didn't shut down some other companys scamming us too? No way! I'm hmm... less than shocked..

    • by profplump ( 309017 ) <> on Wednesday December 12, 2007 @04:18AM (#21668509)
      Because the credit card company doesn't actually have damages. They don't even get bad PR. Here's what happens:

      1. Bad Man, Inc. charges you through his CC processor, Bad CC Processor, LLC
      2. Bad CC Processor, LLC forwards the charge to your CC company.
      3. You notice and dispute the charge with your CC company.
      4. Your CC company gladly removes the charge from your account.
      5. Your CC company refuses to pay Bad CC Processor, LLC.
      6. Bad CC Processor, LLC refuses to pay Bad Man, Inc.

      Now, if the CC processor wasn't dirty, they'd eventually refuse to process charges from Bad Man, Inc., because he's obviously a fraud. But they are dirty, so they don't do anything. And if Bad Man, Inc. wasn't dirty he'd probably provide evidence to support his charges and try to get payment. But is his dirty, so he doesn't do anything.

      At no point in that process does the CC company lose any money, other than a few minutes of telephone support time. They probably know that Bad CC Processor, LLC is dirty too, they just don't care. Obviously it would be good for their customers if they refused to accept charges from Bad CC Processor, LLC, but they aren't very motivated because, while they have to deal with some fraud reporting, they don't lose any money, don't really risk their reputation, and still get to process the successful 65% of charges that come in. If you've ever worked in a sales-oriented company, you'll know that it's essentially impossible to get sales to walk away from existing revenue streams, even if you could sustain a better profit margin on other types of business.
      • Re: (Score:1, Insightful)

        by Anonymous Coward
        Except that in your example above, you orignal vendor has the cash already, before the dispute gets returned. THEN the processor can try to take it back, but if it's not in the account or get's rejected (think stop payment) then the processor is out the cash. If this happens too much the processor drops the merchant. But then again, they're both shady, and therefore probably just splitting the fees they do collect and the costs incurred.
      • by Aqualung812 ( 959532 ) on Wednesday December 12, 2007 @10:20AM (#21670251)
        There is a problem with your list at step 5. You are missing step 2(a), where CC company pays bad CC Processor, LLC. Bad guy has his money at the end of the day in most cases. Since they have already been paid, step 5 is more like:

        5. Your CC company requests proof of transaction

        6. Bad CC company provides tainted proof

        [decision tree]

        6(a). Your CC company calls the lawyers

        6(b). Your CC company makes you prove that the charges are false

        6(c). Your CC company decides (a) and (b) will cost more than just eating the cost

        Guess what two they do the most? B and C. In credit cards, almost all of the risk is on the card issuer. The vendor has some slight risk, but only if they don't follow procedures. The card holder has very little risk since Visa and Mastercard force the issuers to pay if there is a dispute. The processor has zero risk.

        • by Repton ( 60818 )


          For card-not-present fraud (such as internet purchases), the merchant wears the cost: if the cardholder complains of fraud, the issuing bank will issue a chargeback (assuming they believe the cardholder). The merchant will end up out of pocket, and will probably have to pay a penalty fee as well. That's why issuing banks don't care about online card fraud: they just pass the costs on to the merchants.

    • by Belial6 ( 794905 ) on Wednesday December 12, 2007 @05:35AM (#21668839)
      Because this was not credit card fraud. It was debit card fraud. Given that regular debit cards need a pin to access the account, it means that this was 'check card' fraud. I don't know why anyone would be surprised by this since Visa advertises that these cards are easy to commit fraud with. This was inevitable, and will only get worse until people start to raise a stink with their bank for trying to screw them by issuing 'check cards' instead of regular atm cards.

      It always amazes me how many people think it's a good idea to carry a card that give access to their checking account with no pin, no id, and not even a signature.
      • Check cards require a PIN to get cash out of an ATM. They require a signature for purchases over $25 in most places. Most check cards are also now actually VISA or Mastercard backed... ie you can dispute the charge just like a credit card. In some respects they are really just credit cards secured by your bank account... you post a transaction via credit and it gets processed by VISA et al whom draws from your bank account to cover the charge.

        IMHO it's much better than cash if you like to have a paper trail
        • by Belial6 ( 794905 )
          "Check cards require a PIN to get cash out of an ATM. They require a signature for purchases over $25 in most places."

          The problem isn't that the good guys can use a secure method to access there money. The problem is that the bad guys can use an insecure method.

          "ie you can dispute the charge just like a credit card."

          The difference is that you are trying to get your money back, instead of refusing to pay for someone else's charges. You also recieve no protection from the cost that cascade from the
      • I'm not sure what you've been given by your bank.. but I've always been under the impression that there is no such card in existence (one that requires neither a pin nor a signature).

        A "debit card" (as issued by US banks at least) is merely an ATM card bearing a Visa or MasterCard logo. It can be used as a regular ATM card (with a pin), as a "check card" (again, by using a pin at the POS), and thirdly as a credit card (by signing the receipt).

        As with all credit cards, though, if you chose that option, no si
        • And also, according to TFA, these were electronic debits. That means the consumer used the "Pay by check" option (Amazon and loads of merchants offer this now) and they ponied-up their routing number and account number.

          It had nothing to do with a "check card."
        • If you chose to process your debit card as a credit card, thru the CC network, you get credit-card-like protections from fraud.

          Not so. Debit cards have different pricing structures associated with their processing. Credit cards have federal banking laws which guide what can and can not be done. Debit cards do not fall under these same guide lines.

          The reason debit cards are so popular with merchants is they tend to cost a lot less to process. The reason being, they tend to offer far less liability for the me
          • Re: (Score:3, Informative)

            by encoderer ( 1060616 )
            Actually, you should check your facts.

            Any bank that issues a card with the Visa or MasterCard logo has agreed to meet or exceed the consumer protection policies of Visa or MasterCard. This is how it's ALWAYS been, debit card horror stories notwithstanding.

            "Debit cards have the same security protections as credit cards. Just like credit card cards, debit cards have Zero Liability* fraud protection and dispute resolution options."
            • by Belial6 ( 794905 )
              Either you did not read what you linked to, or you did not understand what it said. Yes, they gave their policy a secure sounding name, but if you read the policy, it is not even close to being "Zero Liability". The Astrix next to the name should have given you a clue that you should read the details a little more critically.
              • No, it's not "zero liability" for all transactions. In fact, that only applies to a few select types of fraud. For all other signature-based transactions, there's a $50 cap on liability. Last time I checked, that's the same liability cap on my Visa and MasterCard branded Credit Cards.

                Perhaps YOU should've read the links and the linked-to liability policy?

                I never said there was "zero liability." I said (twice, in fact) that the liability exposure was simply no greater than that of a credit card.
                • by Belial6 ( 794905 )
                  Of course you are STILL wrong. The peripheral liability caused by having insufficient funds in your in your checking account is dramatically greater than that of having a credit card maxed out. So, no there is not a $50 cap on liability. Saying that there is a $50 cap on liability is marketing speak. In fact what they mean is that there is a $50 cap on liability to your bank. The liability to other entities caused by insufficient funds does not have any cap at all.

                  If you can point me to the spot whe
                  • "If you can point me to the spot where they agree to pay any and all bounced check fees/penalties, and all interest that is added to an account due to increased rates from a bounced check, I will concede defeat in this debate."

                    Since you never responded to the post where I did, in fact, point you to such a spot, I'm left to assume that your silence is your concession.

                    Well played. But next time, bring, ya know, facts. :)
              • Re: (Score:1, Flamebait)

                by encoderer ( 1060616 )
                I just posted this below, but rather than make you actually scroll down, I figured I'd repost here for your convenience:

                More FUD without anything to back it up.

                Here's a more extensive excerpt from Visa. Emphasis mine.

                " Visa's Zero Liability policy took effect April 4, 2000, and is a great improvement on the previous policy. The former policy required that you report fraudulent activity within two business days of discovery. After this two-day period, you could be held responsible for up to $50 of
                • by Belial6 ( 794905 )
                  Which is NOT all of the liability that is associated with fraudulent use of a 'check card'. What part of money not being in your checking account causing all sorts of peripheral liability don't you get?

                  This isn't a case of some people spreading FUD. It is a case of other people buying into marketing lies hook line and sinker.
                  • Do tell.. what is this "peripheral liability?" I mean, there are 3 things people could do with your checking account info..

                    1. Deposit into it
                    2. Withdrawal from it
                    3. Give the info to somebody else, who can recurse those 3 options.

                    I personally wouldn't mind #1, their policy covers #2, and federal criminal law covers #3.

                    So... what, exactly, are you talking about?

                    Your lack of specifics in both your posts communicate the fact that you're talking out your ass.
                    • I believe that Belial is attempting to point out the following series of actions:

                      1. You have $10K in your day to day account (to which a Visa or Mastercard Debit card is attached).
                      2. Your debit card number is used in a series of fraudulent transactions totalling $32,450.
                      3. Your account is overdrawn, netting you a $30 fee from your bank.
                      4. You dispute all the charges.
                      5. You cannot pay your mortgage (and your salary is only beginning to make a dent on your debt to the bank). This costs you an extra $2000 in i
                    • Oh, notice I'm not saying he's correct, or wrong. I suspect it will depend entirely on your own specific circumstances.

                      But I think I have explained what he meant.
                    • by Belial6 ( 794905 )
                      Yes. That is a dramatic version of what I meant. The biggest hit many people would take would be in that it is very common for credit cards to raise their interest rates from a very good 20% if you have a bounced payment. For all of those people that carry credit card debt, this can be a very expensive problem. But the numerous overdrafts and penalties from those that got the bad checks can easily add up to hundreds of dollars that is not covered by the zero liability*.
                    • The problem here is that, according to Visa regulations, that $32,450 would be put back into your account within 5 CALENDAR days at the maximum. Moreover, MOST banks have a policy of crediting your account the balance within 24-48 hours. In fact, that's the policy of a few major banks I checked yesterday, including Chase, BoA, Citi and Wells Fargo. It turns out that MANY banks offer 24-hour replacement, including mine.

                      Which means that your scenario would end at step 4.

                      To see proof of this, just look in this
                  • Re: (Score:1, Flamebait)

                    by encoderer ( 1060616 )
                    Again, here's a cross-post. I want you to feel stupid as soon as possible, and by cross-posting I can ensure you feel stupid a couple seconds earlier than you otherwise would...

                    "Visa's cardholder protection policy requires all financial institutions issuing Visa products to extend provisional credit for losses from unauthorized card use within five business days of notification of the loss. However, many major financial institutions affiliated with Visa will issue provisional credit even earlier--within
                  • Since some tool abused the moderation system, I've decided to re-post everything I wrote. This way it goes back to +2 and everybody can see it and enjoy my wit :)

                    Again, here's a cross-post. I want you to feel stupid as soon as possible, and by cross-posting I can ensure you feel stupid a couple seconds earlier than you otherwise would...

                    "Visa's cardholder protection policy requires all financial institutions issuing Visa products to extend provisional credit for losses from unauthorized card use wit
            • LOL.

              Please remember that when you checking account has zero dollars and you're working to get it back...all the while your other checks are bouncing and you credit is going to crap.

              But hey...if you want to ignore facts, please go ahead.
              • Re: (Score:1, Flamebait)

                by encoderer ( 1060616 )
                More FUD without anything to back it up.

                Here's a more extensive excerpt from Visa. Emphasis mine.

                " Visa's Zero Liability policy took effect April 4, 2000, and is a great improvement on the previous policy. The former policy required that you report fraudulent activity within two business days of discovery. After this two-day period, you could be held responsible for up to $50 of the unauthorized charges. With the new Zero Liability policy, you're no longer required to report fraudulent activity within
                • Really? You think? What are you on? Do you honestly believe the BS you're saying or are you just stupid?

                  First of all, there are LOTS of bank issued *check cards* which have no affiliation with Visa or Mastercard. This is actually the majority as they are far more profitable. Second of all, go read what I said.

                  The only person looking silly here is you. And that's reinforced by your position as it's clear you're trying to ding me for speaking in absolutes where I clearly did not. I specifically did not. Even
                  • Re: (Score:1, Flamebait)

                    by encoderer ( 1060616 )
                    God, this is so much fun.

                    1. I specifically said "a card with the Visa or MasterCard logo."

                    2. I know you're not speaking in absolutes. That's because people like you who have no clue what they're talking about use language that's as general as possible to try to hide the fact that you have no clue what you're talking about.

                    3. And HERE'S where you look stupid again...

                    You talked out your ass and said...
                    ". And I don't care what you think you read, they are not going to return it to you the day you
                    • Looks like somebody got Mod Points today. Oh well. They'll be dinged in Meta-Moderation and anybody still reading this thread is going to read ALL the posts, not just those mod'ed >1.

                      And i'm so thoroughly into Excellent Karma that it would take this guy and his 20 friends to REALLY do any damage.

                      I take this as sure proof that I spanked your ass SO HARD that this was the only recourse. I *LOVE* it.

                      Anytime, bro. Whenever you want to be put in your place, just let me know, I'm available. You can post drivel
                  • Since some tool abused the moderation system, I've decided to re-post everything I wrote. This way it goes back to +2 and everybody can see it and enjoy my wit :)

                    God, this is so much fun.

                    1. I specifically said "a card with the Visa or MasterCard logo."

                    2. I know you're not speaking in absolutes. That's because people like you who have no clue what they're talking about use language that's as general as possible to try to hide the fact that you have no clue what you're talking about.

                    3. And HERE'
              • Since some tool abused the moderation system, I've decided to re-post everything I wrote. This way it goes back to +2 and everybody can see it and enjoy my wit :)

                More FUD without anything to back it up.

                Here's a more extensive excerpt from Visa. Emphasis mine.

                " Visa's Zero Liability policy took effect April 4, 2000, and is a great improvement on the previous policy. The former policy required that you report fraudulent activity within two business days of discovery. After this two-day period, you
            • BTW, I used to be in the credit card industry. Specifically, transaction and clearing house processing.
          • You seem to be confusing true debit cards (where you must enter a PIN, can get cash back, etc.) with the credit cards with immediate automatic payment. They're the same piece of plastic and appear to have the same behavior, but are actually very different things.

            In fact, that's why you'll often find modest fees associated with 'pin use'. If you use it as a credit card, normal credit card processing fees apply and (iirc) the bank gets a small cut as issuer. If you use it as a debit card, the bank has to t
            • You seem to be confusing true debit cards

              Wrong. I clearly said debit cards. Debit check cards are different but still do not provide credit card protection.
    • by Shivetya ( 243324 ) on Wednesday December 12, 2007 @08:02AM (#21669421) Homepage Journal
      They keep refering to "bank accounts" which implies to me that they have the routing number and account number. Most likely preying on people with bad credit who could not get Credit Cards

      Defendants withdrew funds from consumers' bank accounts in one of two ways: by electronically debiting consumer bank accounts through the Automated Clearing House Network or by submitting checks and falsely representing that the consumers had approved them.

      See []

      So this is a case of direct taking from accounts or use of fradulenet checks. That is why no Credit Card company raised an alarm, they were not even in the loop

      • by jandrese ( 485 )
        Yeah, and wire fraud or check fraud is a PITA too, since unlike credit or debit cards there is very little protection beyond what your bank feels like giving you. That's also why it took 2 years to get these guys I suspect.
  • took [OT] (Score:2, Funny)

    by Seumas ( 6865 )
    The title of this article made me, for the first time in my entire life, notice that "took" is a really weird word.
  • ouch, reject fees? (Score:3, Interesting)

    by marcushnk ( 90744 ) <[moc.liamg] [ta] [sutcenes]> on Wednesday December 12, 2007 @04:47AM (#21668655) Journal
    I'm not sure about in America but here in Australia if someone tried to debit money from your account and it fails YOU the account holder get slugged a fee.
    I wonder if this was the case for all the failed unauthorized attempts...?
    • you wouldn't think so because what your talking about are dishonor fee's, and only get applied if there isn't enough money in your account.They can't charge you a fee for a fraudulent transaction, or if they did i'd be screaming blue murder all the way to the accc.
    • Around here, we have NSF (Non-sufficient-funds) fees, which basically say that if you write a bad cheque etc that gets rejected due to lack'o'cash, you get hit with an extra penalty. In this case, the transaction was perfectly legit on behave of the party requesting money, but the money just wasn't there to pay them.

      The same does not apply to debits that have been rejected due to the requesting party having insufficient authority to make a withdrawal.
  • That's why credit cards are better than debit cards for cardholders.

    With debit cards when stuff happens, the money is gone from YOUR account.
    You then spend a lot of time and resources trying to get the money back.

    With credit cards when stuff happens, the money is gone from someone else's account.
    You then contact the card company and say "Nope, I didn't buy that".

    See how much the banks and FTC etc care about those fraudulent debits? Yes they care, but obviously not that much.

    But if you're a merchant when stu
    • You're sort of right, but credit cards can be a bad thing if you share one with someone and the relationship is ending. At least with a debit card the worst they can do is empty your current account.

      My neighbor of a few years back had his wife walk out having spent tens of thousands on credit cards in the weeks before, *and* emptied his bank account for good measure (then demanded alimony, nice lady..). He never managed to get her to pay the card bills directly, but took all the money back as a 'shared expe
      • by fbjon ( 692006 )
        I agree, a debit card is a direct extension of cash, which means if it isn't on the account, it can't go anywhere. I even have a separate account from where I move money to the account connected to the card, just to avoid having all my savings in one stealable basket.
      • This might sound strange, but my parents* each have individual credit cards, not a group account.

        They both have excellent credit, so there's no problem with one not being able to get a card. From watching court tv, joint credit cards is a big way to get in trouble. Person A of reasonable financial management and income hooks up with person B of no financial management and no income. Person A lends, cosigns loans and credit cards because B can't get them, then wonders why B gets in trouble, overspends, an
    • Re: (Score:3, Informative)

      When Apple Computer made a fraudulent charge to my debit card, it only took a phonecall to the bank and a mailing in of the form they sent me (postage already paid on the response envelope they sent me by the way). Sure enough, the money was gone from my account but it was back within 48 hours from picking up the phone, and of those 48 hours I spent 10 minutes actively working on the case. Not a lot of time spent, and no other resources spent except the ink for the form and the saliva for the envelope.
    • by Nursie ( 632944 )
      Whilst it's true to a small extent, it's not entirely.

      You simply call the bank and tell them that the charge you are disputing was not authorised. The same rules apply. You may have to wait a few days, but that's it.

      Or do things work differently in the great US of A?
      • by jandrese ( 485 )
        No, people just think they work differently because they've never read the documentation that comes with their debit cards. Really, debit cards generally have the same liability policies that credit cards have, although it's a little cheaper for the merchant because it's assumed that if you require someone to punch in a PIN to make the transaction then it's less likely to be fraudulent (the signatures on Credit Cards really don't offer much protection at all).
      • And what about the money that isn't in your account? Also, bounced check and overdraft charges suck.
        • by Nursie ( 632944 )
          The money that isn't in your account comes back to you after a short delay. Maybe a couple of days, which is an inconvenience but not usually the end of the world.

          It comes back because the bank are legally bound to give it back the moment you tell them that you didn't authorise that transaction. The bank also remove the bounced check and overdraft charges because what happened was their fault, not yours.
      • by TheLink ( 130905 )
        With credit cards the money is still in your account while you "wait".
        With debit cards the money is gone while you _wait_.

        Very big difference to me :).

        "Alleged IOU" in somebody else's pocket vs my money in somebody else's pocket.

        Maybe most people think that's practically the same thing, but I don't.
        • by Nursie ( 632944 )
          Yes, but the original poster made it sound like you'd be waiting weeks or months for the outcome of legal battles and tracking the money and stuff. You aren't. You tell the bank that the transactions were not authorised and they refund them. It may take 48 hours. 48 hours is an inconvenience but not the end of the world.
          • by TheLink ( 130905 )
            Where do you get your 48 hours figure from? Who guarantees it? Is it the law or it's just part of the "terms and conditions are subject to change" stuff.

            From: []

            "The financial institution must promptly investigate an error and resolve it within 45 days. For errors involving new accounts (opened in the last 30 days), POS transactions, and foreign transactions, the institution may take up to 90 days to investigate the error. However, if the financial
            • by Nursie ( 632944 )
              There's a difference between "lost or stolen cards" and fraud liability.

              If you have lost your card you have some liability. If you have had it stolen you need to tell the company ASAP and have very minimal libaility. IMHO.

              As for citations:

              The Banking Code [] which all UK banks are signed up to. Check out section 12.12

              Admittedly this is a voluntary agreement and not backed by law, but it's a start.

              The BBC [] say that the law states you are not liable for any fraud if you are still in posession of the card.

              Can't fi
              • by TheLink ( 130905 )
                Sorry, I'm having difficulty finding the 2 days or 48 hours you claimed before, in the PDF you linked to. I don't even see any promise on any time limits on when you'd get your money back, or when the Bank would credit it back to you in good faith. As mentioned earlier - the US banks are supposed to do that within 10 days under normal circumstances.

                Even if what you claim is true it's still so hard to find I bet the UK bank staff themselves don't know of such a promise/law, so there's no guarantee in _practi
                • by Nursie ( 632944 )
                  Oh, I'm sorry, I thought you were genuinely interested in this stuff, not just trying to be an asshole. I told you that my links weren't complete and I didn't have the time or energy to look for more. I invite you to look for yourself. No, the BBC are not a legal or banking institution. They are a British news source, and a very good one.

                  Your closing comments are utterly ridiculous. You should only use debit cards where you can't get credit and cash is no option? What nonsense.

                  Oh and this "Even if what you
                  • by TheLink ( 130905 )
                    You were the one confidently telling people that they can use debit cards and if stuff happens, they can call the bank up and in two days they'll get their money back, no fuss and trouble.

                    And now you imply I'm trying to be an asshole, when you can't even come up with any evidence backing your claims.

                    If things turn out not as rosy as you painted and people believed you, they might be rather "inconvenienced".

                    FWIW, I _am_ an asshole, I sometimes try not to be one, unfortunately I don't succeed often enough.

  • yeah, nice family friendly tagging there..

    On topic though, who on earth doesn't check to see whether what they are being billed for is what they actually owe? Ok some did, which is how they got caught, but obviously not everyone did.

    I check all my bills every month, especially ones prone to change, like amazon/Audible/other online shopping orders and suchlike. I didn't always have to be so thorough, but there's this thing called the internet, and apparently not everyone on it is a cuddly bundle of trustwor
    • If the bill's about what I'm expecting then why check every single item?
      I could be doing something fun instead.

      And I sure as hell don't keep receipts to check what I think I've spent against what the bank think, I'd be drowning in paperwork.

      It's all a hassle and largely unnecessary.
  • Lil' background info (Score:3, Informative)

    by quietwalker ( 969769 ) <> on Wednesday December 12, 2007 @11:38AM (#21671097)
    It seems some people are confused about the nature of the Automated Clearing House, and making very odd assumptions. Since some of this is due to a conflict in terminology, hopefully I can clear this up. ACH is a big network. You might say it's really a collection of protocols and legal policies that allow banks and credit card companies to talk to each other. Every time you use your debit card in a non-branch office (like a Wells Fargo card in a Bank of America ATM), you're using ACH. Now, I'm going to skip the in-depth network topology and give you the highlights. In short, the entire setup consists of Vendors attached to a Payment Processor , which are attached to ACH, which is responsible for routing a transaction from one ACH member to a Financial Institution (like a bank or credit card company). Vendor->Payment processor->ACH->Financial Institution. Now, why not have the Vendor connect to the FI directly? Well, each vendor would need a connection for every card. As in physical lines. That makes it expensive for everyone, and hit-or-miss for the consumer - what if they don't support YOUR card? Okay, so, why not have the vendor connect to the ACH directly? Well, when you make a transaction on the ACH, there's no additional security. Basically, it's assumed that you have the authority to make the transaction, or you wouldn't be doing it. Imagine getting a credit card scanner and service for like 300$, quickly making several hundred thousand in fraudulent charges, and skipping the country. Generally speaking, you need to be an established business with accountability to be allowed to connect to the ACH - and that's where payment processors come in. Oh, and quick terminology lesson. In ACH parlance: A debit means "take money from an account" A credit means "put money into an account" They have nothing to do with credit cards, or debit cards, or anything of the sort. Payment Processors, usually make money per transaction, or per connection time. Either way though, they profit from vendor transactions whether valid or not, so there's a good incentive to 'look the other way' with problem vendors. So, this payment processor was following all the rules, but they're charging it as sort of an accessory to criminal acts by their customers. The states are saying that they knew these were invalid debits, but they processed them anyway, just to make money. Technically it would be the vendors that have to suffer here, but the states are trying to hit every target they can, especially when busting a little work-out-of-your-house-2000$-laptop-scammer is not worth the money spent sending them to trial.

"Everyone's head is a cheap movie show." -- Jeff G. Bone