InterBill payment processor fined $1,779,000 for pharmacy cards scam

A payment processor InterBill Ltd. was ordered by a federal court to $1,779,000 in consumer redress for debiting consumers’ bank accounts without their authorization as well as to cease illegal practices. In 2006, the Federal Trade Commission charged the defendants with unfairly debiting thousands of consumer accounts for a merchant’s nonexistent “discount pharmacy cards,” despite indications that the pharmacy card operation was bogus.

The filing of the FTC said that the defendants anticipated that the scam would generate high return rates, that they did not request or obtain proof that consumers had authorized debits to their accounts, and that they continued to process charges even after receiving complaints from consumers and banks and unacceptable explanations about unauthorized debits from the merchant.

The compliant stated that over 70% of the merchant’s transactions were returned or refused by the consumers’ banks, and more than $2.38 million was debited from consumers’ accounts, some of which was later refunded or reversed.

According to the current judicial ruling InterBill Ltd. and its owner, Thomas Wells are prohibited from engaging in the unfair practices alleged in the complaint and are required to undertake a reasonable investigation of prospective clients before processing payments for them. The court order requires the defendants to pay $1,779,000 for consumer redress.

InterBill processed payments for a fraudulent enterprise known as “Pharmacycards.com.” The FTC sued the Pharmacycards perpetrators in 2004 and obtained a default judgment against them. In 2005, the Commission sued another company that processed unauthorized charges for Pharmacycards, Universal Processing, and obtained a settlement.