The Federal Trade Commission (FTC) is responsible for uncovering a massive operation by Automated Electronic Checking Inc. (AEC) and its principals, John P. Lawless, and Kenneth Mark Turville to process $ millions from consumer bank accounts without authorization. The company and its principals have been ordered to pay $950,000 to settle the action against them. In a press release the FTC went into detail about the company’s practices:
Payment processors enable merchants to obtain customer payments for products and services via electronic banking. Processors provide a link between merchants and consumers’ banks. They are compensated by receiving a fee for each consumer transaction that they process. According to the FTC’s complaint, AEC knew, or should have known, that some of its client merchants got consumers’ financial account information through deceptive means and lacked consumers’ authorization to debit their accounts. For example, the FTC has alleged that many consumers thought they were applying for a credit line through one of AEC’s client merchants, but instead they were enrolled in an online “shopping club” with hefty fees. The FTC has also charged that AEC often debited the accounts of consumers who had never heard of its client merchants, had never knowingly bought anything from them, and could least afford unauthorized debits, which resulted in the additional burden of bank overdraft charges.