For immediate release - Tuesday, February 15, 2005.
Contact Bob Brammer - 515-281-6699.
"Electracash, Inc." Agrees to Stop Processing
Withdrawals for Telemarketing Scams
Miller said: "We commend Electracash. Our goal is to deny access to a crucial tool of Canadian telemarketing
schemes that target low-income and older Iowans - companies processing automatic withdrawals from victims'
bank accounts for the con-artists."
DES MOINES. Attorney General Tom Miller said today that a "third-party processor" that handled electronic withdrawals
from the bank accounts of Iowa victims of Canadian telemarketing schemes has agreed to halt any processing of
withdrawals for such schemes and to take strong, proactive measures to prevent facilitating fraudulent schemes.
"Many big, fraudulent telemarketing schemes now operate out of Canada," Miller said, "and many count on U.S. third-party processors to arrange withdrawals from victims' bank accounts. We aim to nullify that crucial tool," he said.
"In this instance, Electracash, Inc., a third-party ACH or Automated Clearing House processor, has stepped up to the plate
and agreed to take many positive steps to avoid processing withdrawals for fraudulent schemes," Miller said. Electracash,
Inc., is located in Signal Hill, California. The agreement is in the form of an "Assurance of Voluntary Compliance"
between the company and Miller's Office.
"Our position is that
the law requires ACH processors NOT to assist any telemarketer when the
processor knows or should have known that the telemarketer is engaged
in deception," Miller said. "That's why we are very pleased that Electracash
has agreed to investigate and screen potential clients in advance, monitor
their clients' practices, do audits when necessary, and cut off clients
that appear to be fraudulent." [See below for chart showing how con-schemes
sometimes use the ACH system.]
Miller said Electracash, Inc., also has paid a total of $15,774 that was mailed to 56 Iowans yesterday - victims of a
telemarketing scam that hit Iowans last year. "Electracash did not perpetrate the scam," Miller emphasized, "but the con-artists used Electracash to access people's bank accounts through the ACH system. Now Electracash is taking steps to
ensure that its facilities are not used by such schemes, and that is going to help."
Miller said the underlying scheme was perpetrated by Xtel Marketing, Inc., doing business as "Med Supply" and
"Millenium [sic] Consulting."
"Med Supply" and the related businesses:
Miller said the U.S. Federal
Trade Commission took action against the "Med Supply" companies in November
2004. According to an FTC press release dated November 22, Med Supply
"cold-called consumer across the United States and, masquerading as Social
Security or Medicare representatives, told consumers that they must provide
bank account information or risk losing their Social Security payments."
The FTC also said the companies sometimes told consumers they would enroll
them in a new Medicare insurance program providing discounts on medications
and eyeglasses. Click here for the FTC
"Med Supply" news release, Nov. 22, 2004.
"Most Iowa consumers were debited $299 by Med Supply via Electracash, Inc.," Miller said. One Iowan is receiving a
refund of $329, ten are receiving $199, and 45 are receiving $299, he said. Checks were mailed yesterday and likely will
reach consumers today and tomorrow.
One couple joined Miller at the news conference, Helen and Harry Russell of Des Moines, and they received their check
for $299. The Russells noticed the "Med Supply" billing, and disputed it vigorously. Miller said other victims might not
even have realized they were being billed or noticed the debit from their bank account.
"In our experience, telemarketing con-artists sometimes deceive people into giving some type of authorization," Miller
said. "In other cases, they may just charge consumers no matter what the consumers say. It's another very good reason to
examine your bank account statements every month."
The Consumer Protection Division of Miller's office contacted Electracash and called attention to the fact that during
fifteen months of ACH processing for "Med Supply" / "Millenium" there was a very high 44% "return rate" out of the
3,129 transactions processed nationwide.
The ACH or Automated Clearing House Network:
Electracash will investigate
potential merchants before granting them access to the automated withdrawal
network, they will monitor their clients, and they will cut off any who
have a high rate of returns or complaints that suggest fraud.
Electracash also agreed not to do any processing for "restricted businesses" selling credit-related goods or services,
supposed anti-telemarketing devices, or identity theft packages.
Miller said his office is continuing to focus on companies that facilitate telemarketing schemes or other scams. "In this
instance, our goal is to deny access to a crucial tool of Canadian telemarketing schemes that target low-income and older
Iowans - companies processing automatic withdrawals from victims' bank accounts for the con-artists. We also are
looking at others who might facilitate scams, such as list brokers or other links in the financial chain," he said.
"We need to enlist the cooperation of legitimate businesses that are in a position to deny con-artists access to the tools
they need to work their fraud," he said.
The Iowa Attorney General's Office has been a leader for many years in combating telemarketing fraud. "It can harm
anyone, but it tends to hurt older Iowans most of all, and we don't look kindly on that," Miller said.
Tips to Avoid Telemarketing Fraud:
Miller offered several tips to avoid telemarketing fraud:
- Keep your account information private. Don't give out bank or credit account numbers unless you made the call and
you know who you are dealing with.
- Examine your bank statement every month. Look for anything unauthorized
or unwanted. Dispute any incorrect charges. If necessary, file a complaint
with the Attorney General.
- Put yourself on
"Do Not Call" list - that will help reduce unwanted calls (but some
con-artists will of course ignore it and call you anyway.)
- Resist high pressure to make a quick decision. Take your time - insist
on written information in advance -- or just hang up. You don't need
to be polite if you suspect a scam.
- Be especially careful of "free trial offers" - some sellers charge
credit cards automatically when the free trial period ends.
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