Bogus Charges, Unknowingly Paid

FTC officials said they have tried to contact Turner and Pearson but have not received a response. A call to Pharmacycards.com's toll free line yesterday was answered by a customer service representative who said his company no longer has any dealings with 3rd Union or HelmCrest.

Thorleifson said the FTC continues to look into the question of how much the three payment processors knew about the debits they were sending to banks. The processors were InterBill Ltd. of Las Vegas, Universal Processing Inc. of Irvine, Calif., and Payment Resources International of Newport Beach, Calif.

3rd Union and HelmCrest were able to get around the fact that they did not have customers' authorization to debit their accounts because written authorizations are not required for certain types of transactions that are one-time and do not originate through telemarketing, Thorleifson said.

The FTC's complaint states that Turner and Pearson received nearly $1 million before the operation was exposed. More than $2 million has been frozen in reserve accounts, and the FTC hopes to have that money returned to bank customers.

Thorleifson said the agency is investigating who sold the checking account numbers in the first place. "The fact that it's not illegal doesn't make it easy to do," Thorleifson said. Legitimate companies that sell customer information "don't traffic in bank account and credit card numbers," she added.

Nessa Eileen Feddis, an attorney with the American Bankers Association, said anyone selling bank account numbers has got to be "fraudulent" and that no reputable banking institution would do that. "It would be suicidal for a bank to sell names and account numbers," she said.

Edmund Mierzwinski, consumer advocate for the U.S. Public Interest Research Group, said the case demonstrates vulnerabilities in the system.

"It's shocking that anyone is selling checking account numbers, but then again our laws are quite weak," he said. "They're exploiting a loophole. Congress has not been interested in passing strong financial privacy laws. But maybe this will change their minds."

Mierzwinski said the Pharmacycards.com scheme should also remind consumers of the importance of checking their bank statements. "The increasing use of electronic transfers and automatic debit where a consumer authorizes access to their checking accounts means this is the tip of the iceberg," he said.

Melissa Rozecki, a church secretary from Delanco, N.J., checked her statement earlier this year and found that she had a $139 charge from Pharmacycards.com, a company she had never heard of. The unexpected charge caused three checks to bounce, she said.

She found a toll-free number for the company and was told by the customer service representative that information about the discount card program had been sent to her and that because she had not canceled the service within 30 days, she had been charged.

The FTC said Pharmacycards.com often sent such notices, but that they were typically mailed after the customer had already been charged. Rozecki said that in her case, the address where the information was allegedly sent was her mother-in-law's house.

"I have no idea how they got that address or my bank account number," said Rozecki, whose bank refunded the $139 and fees for the bounced checks. "It was scary. I didn't know what charges would show up next."

Staff researcher Madonna Lebling contributed to this report.