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Company ‘Turned a Blind Eye’ - Unauthorised Debiting

Company ‘Turned a Blind Eye’ - Unauthorised Debiting


The United States Federal Trade Commission (FTC) has placed a ban on a payment processing company and slapped it with a $950,000 fine.

The FTC’s action against Automated Electronic Checking Inc (AEC) and its principals, John P Lawless and Kenneth Mark Turville, are part of its continuing efforts to protect consumers in financial distress.

AEC and the two principals are banned from processing electronic payments under a settlement with the FTC, which resolves charges that they debited, or tried to debit, millions of dollars from tens of thousands of consumers’ bank accounts without their consent.

Ignoring Complaints & Deceptive Practices

Payment processors enable merchants to obtain customer payments for products and services via electronic banking. Processors, such as AEC, provide a link between merchants and consumers’ banks. They are then compensated by receiving a fee for each consumer transaction that they process.

According to the complaint, AEC encouraged merchants to use remotely created payment orders (RCPOs) as a way to avoid the scrutiny other payment methods provide.

“The FTC charges that AEC turned a blind eye to excessively high return rates – the rate of transactions that were rejected and returned by consumers or their banks. AEC also instructed its clients on ways to avoid detection and ignored consumer complaints,” the FTC alleged.

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’ authorisation to debit their accounts.

Phoney Shopping Club & Overdraft Charges

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 said 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 unauthorised debits, which resulted in the additional burden of bank overdraft charges.

According to the complaint, AEC’s violations of the FTC Act are exemplified by the ‘fraudulent and unauthorised’ transactions it processed for two merchants - EdebitPay LLC and Platinum Online Group, both run by Dale Paul Cleveland and William Richard Wilson.

Cash Returned to Wronged Consumers

From February 2008 to November 2010, AEC processed more than $49.8 million for EDebitPay, which claims to be a 'leader in online performance based marketing', and Platinum. During this period EdebitPay and Platinum had consistently high return rates. The banks notified AEC of the specific reasons for the high return rates, and the FTC said that AEC knew that the principals of both companies were already subject to an earlier FTC order.

The settlement order requires AEC to pay $950,000 it earned from processing for EdebitPay and Platinum. The money will be returned to consumers harmed by AEC’s actions. The order also bans AEC, Lawless, and Turville from processing payments by any means in the future.

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Pippa Chambers

Pippa Chambers

Freelance News Journalist at PerformanceIN - working to source the latest and breaking news in performance marketing. 

From newspapers to national B2B magazines and technology reporting, I have covered a variety of genres. NCTJ/NCE qualified.

Please email me at and follow me @PippaC1

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