The Consumer Financial Protection Bureau has filed a lawsuit against payment processor Intercept Corp., which is doing business as InterceptEFT, and its two senior executives, Brian Smith and Craig Dresser.
The company is alleged to have knowingly enabling unauthorized and illegal withdrawals from customers. Debt collectors are listed as a client category of Intercept in the complaint, a copy of which can be accessed here.
Defendants, however, have processed payments for many clients even in the face of numerous indicators that those clients were engaged in fraudulent or illegal transactions. Even though they knew or should have known of this illegal behavior, Defendants continued to process for these companies anyway.
The CFPB cited a number of examples where the processor ignored complaints and indicators that the transactions were illegal or fraudulent.
… consumers disputed that they had authorized withdrawals on over 1,800 transactions initiated by Intercept between 2011 and 2014. These [institutions]brought these issues to Defendants’ attention, but Intercept, Smith, and Dresser failed to conduct any meaningful investigation, or take any meaningful action, in response.
The company also created a program to hide or circumvent return rate thresholds that were as much as four times higher than acceptable levels. Some clients had monthly return rates as high as 80% and the company did nothing, according to the complaint.
The CFPB claims that the two executives earned “millions of dollars” from the revenue generated by the illegal transactions.
The suit claims that the defendants violated the Consumer Financial Protection Act.
