Debit Card Scammers Lose Big in Court

Short-term loan peddlers Matthew Patterson, Mark Benning, and Jason Strober, of Swish Marketing Inc., were recently ordered by a Federal court to shell out over $4.8 million. Reportedly, they swindled thousands of payday loan applicants who were hoodwinked into purchasing a debit card during the loan application process. In addition to the fine, the court order forbids Swish Marketing from selling any product that has a “negative option” program, where a consumer’s silence or neglect to refuse a product can be considered as consent to purchase that product.

Swish Marketing Inc. owned and operated multiple websites offering “matchmaking” services for lenders and people in need of a short term loan. The application for the loans appeared on all the sites, and it was in the process of filling out and submitting these applications that many people, unbeknownst to them, also ordered and agreed to assume charges for a debit card.

How it worked went something like this: on several of the sites, once an applicant clicked that button to submit their loan application, they were led to four different product offers that were unrelated to the loan. Each product had very small “Yes” and “No” boxes associated with it, three of which were pre-set to “No” while one, a debit card, had the “Yes” box pre-selected. The pre-checked “Yes” box indicated the applicant’s assent the to the fine print disclosures; namely to purchase the debit card and have the fee deducted from their bank account.

Anyone who clicked an obvious button reading “Finish matching me with a payday loan provider!,” without first un-clicking the “Yes” box pertaining to the debit card, were then charged for that card. On other sites, the debit card was promoted as a bonus and the fee was only disclosed in the very fine print beneath the submit button. The charge for the debit card was, in some cases, as much as $54.95.

Swish Marketing and VirtualWorks LLC, the company selling the card, were charged with deceptive business practices by the Federal Trade Comission in August 2009. The FTC then filed an amendment to the original complaint against Swish Marketing in April of 2010, with the added allegations that Swish Marketing sold to VirtualWorks the bank account information of consumers without the consumers’ consent. Patterson, Benning, and Strober were alleged to have been aware of complaints from consumers regarding the unauthorized debits. Strober, Patterson, Benning, and the VirtualWorks defendants all settled the charges against them.