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InterBill Faces U.S. Suit Over Alleged Bogus Website

InterBill Faces U.S. Suit Over Alleged Bogus Website
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Dec 28, 2006 3:27 PM PST    Text size: 
LAS VEGAS — Third-party processor InterBill Ltd. facilitated an online company’s alleged fraudulent scheme by collecting consumer bank account numbers and then debited funds from thousands of bank accounts, according to court documents obtained by XBIZ.

InterBill, which markets its services to online adult companies, was sued by the Federal Trade Commission Tuesday for attempting to collect $9.9 million in a three-month period in 2004 through an alleged fraudulent website.

That site, PharmacyCards.com, purportedly sold discount prescription cards. Many of the country’s largest retail pharmacies — Krogers, Wal-Mart and Target — were listed on the site, but none ever gave permission to use their name or logos, according to the suit.

The FTC contends that InterBill collected consumer information and debited $139 from each without performing any service or seeking authorization from customers.

The suit further claims that InterBill and company officer Thomas Wells were able to use customer bank accounts to create demand drafts or electronic checks and submit them for deposit into a Las Vegas Wells Fargo Bank account.

Wells, according to the complaint, struck a revenue-sharing deal with PharmacyCards in 2004. But the government says that Wells knew that the deal was nefarious because he revealed in communications to PharmacyCards operators that many of their transactions would be reversed.

“Going into this project we discussed 40-45 percent being the max [rate of reversed debits] that we could tolerate,” Wells was quoted in an email exchange with PharmacyCards operators.

PharmacyCards operates with a London post office box and conducts all its business through prepaid cellular phones, free email and free facsimile accounts, according to the complaint.

In a previous court filing, the FTC said the company is operated by David Graham Turner, who also operates 3rd Union Card Services Inc.

Shortly after commencing the deal, Wells received numerous complaints from banks and even from a customer services call center in Montreal that was set up to “assist” PharmacyCards customers.

Nearly 70 percent of the consumers defrauded by PharmacyCards and InterBill, however, were able to contest their charges, according to the complaint.

Despite the contested charges, InterBill still was able to deposit 30 percent of the funds, earning $2.38 million. “The PharmacyCards operators used the identity of a Cyprus corporation and directed that their funds be wired to a Cyprus bank account, a known tax haven,” the complaint reads.

The FTC seeks a permanent injunction, attorneys fees and $9.9 million in restitution from InterBill for the alleged fraudulent operation between the two companies.

XBIZ was unable to reach Wells or any other official from InterBill on Thursday. The company has offices in Las Vegas, London and Great Neck, N.Y., according to its website.

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