(CN) – InterBill must pay $1.7 million after unfairly debiting thousands of consumer accounts for bogus “discount pharmacy cards,” a federal judge in Nevada ruled. The Federal Trade Commission had accused the company of fraudulently processing payments for a bogus enterprise known as Pharmacycards.com.
The FTC’s federal complaint accused the Las Vegas-based company of not following its own guidelines for new merchants. InterBill allegedly failed to check addresses, phone numbers or references that the bogus merchant provided, and failed to obtain proof that consumers had authorized debits to their accounts after receiving complaints from consumers and banks.
More than 70 percent of the transactions were returned, and more than $2.3 million was swiped from consumers’ accounts, according to the FTC. Some of that money was later refunded or reversed.
In the final order, U.S. District Judge James Mahan prohibited InterBill and its owner, Thomas Wells, from engaging in the illegal practice. The judge also required them to investigate prospective clients before processing payments and called for new record-keeping provisions for five years to allow the FTC to monitor compliance.
InterBill is a payment processing company, which acts as the go-between between merchants and bank or credit card companies.