(COLUMBUS, Ohio) – Following a pair of joint complaints from Ohio Attorney General Dave Yost and the Federal Trade Commission (FTC), a federal judge in El Paso, Texas today issued a temporary restraining order against two companies accused of defrauding millions of dollars from people struggling with credit card debt, halting their operations and freezing their assets.
The complaints allege that two companies – Educare Centre Services and Madera Merchant Services – worked in tandem to use a deceptive telemarketing scheme to victimize financially destressed individuals nationwide.
“Telemarketers aren’t just a pain in the neck, they can also be a pain in your bank account,” Yost said. “We contacted the FTC when we realized this racket extended beyond Ohio’s borders and people nationwide were being hurt.”
Through millions of robocalls, Educare purports to offer its customers the opportunity to consolidate their credits cards to obtain lower interest rates, but the company appears to provide no legitimate services to consumers. Educare is not registered with the Ohio Attorney General’s Office as a telephone solicitor. The attorney general’s office is aware of approximately 450 Ohio residents who were victimized in this scheme resulting in a combined loss of $300,000.
Madera and its owner, Bruce Woods, operate as a third-party payment processor charging consumer checking accounts on behalf of Educare and others. In the last five years, Madera processed more than $18 million in transactions; more than $11.8 million was for Educare making Educare its biggest telemarketing client.
Madera processes consumer payments using only one method of payment. It uses remotely created checks, also known as demand drafts or “RCPOs,” to withdraw funds from consumers’ checking accounts; however, the federal Telemarketing Sales Rule prohibits telemarketers from using remotely created checks as payments for goods or services. Fraudulent merchants can use remotely created checks to create unsigned checks that access a consumer’s bank account without authorization.
Madera opened more than 60 bank accounts in at least 25 different financial institutions, many of which were closed by the financial institutions within six months as a result of the high return rates.
Upon discovering the nationwide scope of the victimization, the Ohio Attorney General’s Office notified the FTC and worked cooperatively to develop the cases. The complaint against Educare and its codefendants alleges violations of three Ohio and federal statutes, for a total of 14 counts. The complaint against Madera and its codefendants alleges violations of two Ohio and federal statutes, for a total of five counts.
Both complaints seek declaratory relief, injunctive relief and consumer restitution.