Defendants Must Pay $100,000 and Up To $15,000 Per Day for Noncompliance
At the request of the Federal Trade Commission, a federal court found a check creation and delivery business and its operators in contempt for violating a court order barring them from creating and e-mailing checks for consumers without verifying users' identities or their authority to draw funds on the financial accounts they use, leaving unsuspecting consumers' financial accounts vulnerable to fraud.
The contempt order requires Thomas Villwock, James M. Danforth, G7 Productivity Systems Inc., iProlog Corporation, and FreeQuick Wire Corporation to pay $100,000 for consumer restitution. It also requires them to pay a fine of $10,000 per day until they demonstrate that they are performing the account and identity verification procedures identified in the 2009 order, and a $5,000-per-day fine until they show that they are disclosing certain information on each check, in compliance with the order.
In the case that led to the 2009 order, Villwock, Danforth, and G7 Productivity Systems operated a website, Qchex.com, that created and delivered checks without verifying that users had authority to access the accounts referenced on the checks. As a result, fraudsters worldwide drew checks on the accounts of unwitting third parties and used the checks mainly for wire transfer schemes, such as mystery shopping. The court found the defendants' operation an unfair practice under the FTC Act and ordered them to implement specific fraud-prevention safeguards for any check creation and delivery software they offer. The FTC's civil contempt action named those defendants and iProlog Corporation and FreeQuick Wire Corporation, which Villwock and Danforth control.
To learn how scammers use money transfers, read Money Transfers Can Be Risky Business.
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