FTC Settles with Debit Card Web Marketers

  |  January 25, 2008   |  Comments

The Federal Trade Commission has settled a case against a group of defendants charged as deceptive marketers that targeted subprime consumers.

As the subprime loan fiasco continues to wreak havoc on the economy, the Federal Trade Commission has settled a case against a group of defendants charged as deceptive marketers targeting "subprime consumers." The settlement requires EDP Technologies Corporation and others to pay over $2.2 million for consumer restitution.

In a US District Court case filed in California, the FTC claimed the defendants promoted a variety of prepaid bank-issued Visa and Mastercard debit cards via Web sites, pop-up ads and e-mails. They also allegedly charged hefty fees without authorization to consumers' bank accounts and marketed unrelated short-term loans on sites including SuperAutoSource.com and SuperCashSource.com.

According to the settlement, the defendants are barred from debiting a consumer's account without authorization, and must clearly and conspicuously disclose fees associated with attaining the debit and credit cards. They also are required to notify consumers when using personally identifiable information to charge those fees, and must do so alongside statements suggesting the cards come with "No Annual Fees" or "No Security Deposit."

The FTC said consumers' accounts were billed $159.95 for fees associated with getting the cards.

Defendants EdebitPay, EDP Reporting, EDP Technologies Corporation, Secure Deposit Card, Dale Paul Cleveland, and William Richard Wilson operated in conjunction as a common enterprise, according to FTC spokesman Frank Dorman. The FTC halted card marketing operations of the same defendants in August; in addition to imposing the penalty, the new settlement is a permanent injunction against the defendants.

In addition to the $2.2 million penalty, the defendants have been asked to sell a car and cough up the net proceeds from the sale. "It's not uncommon for us to seize assets including automobiles," said Dorman, noting, "It's an expensive car."

Defendant Cleveland also is required to pay an additional $667,288 to taxing authorities according to the settlement.

The defendants in the debit card marketing settlement used affiliate marketing programs and other marketing techniques to produce consumer leads for financial services products. Industry watchers say the FTC has set its sights on several players in the lead generation sector. Lead gen firm Adteractive agreed to pay the commission $650,000 in civil penalties for alleged deceptive ad practices in November 2007, and some believe more lead gen industry-related settlements will follow.

Funds from the settlement will be used to pay associated fees, expenses, and liabilities, and to provide "equitable relief, including but not limited to restitution to consumers, and any attendant expenses for the administration of such equitable relief," according to the court document.

ClickZ Live San Francisco This Year's Premier Digital Marketing Event is #CZLSF
ClickZ Live San Francisco (Aug 11-14) brings together the industry's leading practitioners and marketing strategists to deliver 4 days of educational sessions and training workshops. From Data-Driven Marketing to Social, Mobile, Display, Search and Email, this year's comprehensive agenda will help you maximize your marketing efforts and ROI. Register today!

ABOUT THE AUTHOR

Kate Kaye

Kate Kaye was Managing Editor at ClickZ News until October 2012. As a daily reporter and editor for the original news source, she covered beats including digital political campaigns and government regulation of the online ad industry. Kate is the author of Campaign '08: A Turning Point for Digital Media, the only book focused on the paid digital media efforts of the 2008 presidential campaigns. Kate created ClickZ's Politics & Advocacy section, and is the primary contributor to the one-of-a-kind section. She began reporting on the interactive ad industry in 1999 and has spoken at several events and in interviews for television, radio, print, and digital media outlets. You can follow Kate on Twitter at @LowbrowKate.

COMMENTSCommenting policy

comments powered by Disqus

ClickZ Today is our #1 newsletter.
Get a daily dose of digital marketing.

COMMENTS

UPCOMING EVENTS

Featured White Papers

BigDoor: The Marketers Guide to Customer Loyalty

The Marketer's Guide to Customer Loyalty
Customer loyalty is imperative to success, but fostering and maintaining loyalty takes a lot of work. This guide is here to help marketers build, execute, and maintain a successful loyalty initiative.

Marin Software: The Multiplier Effect of Integrating Search & Social Advertising

The Multiplier Effect of Integrating Search & Social Advertising
Latest research reveals 68% higher revenue per conversion for marketers who integrate their search & social advertising. In addition to the research results, this whitepaper also outlines 5 strategies and 15 tactics you can use to better integrate your search and social campaigns.

WEBINARS

    Information currently unavailable

Jobs

    • Internet Marketing Campaign Manager
      Internet Marketing Campaign Manager (Straight North, LLC) - Fort MillWe are looking for a talented Internet Marketing Campaign Manager to join the...
    • Online Marketing Coordinator
      Online Marketing Coordinator (NewMarket Health) - BaltimoreWant to learn marketing from the best minds in the business? NewMarket Health, a subsidiary...
    • Call Center Manager
      Call Center Manager (Common Sense Publishing) - Delray BeachWanted: Dynamic Call Center Manager with a Proven Track Record of Improving Response...