Qchex.com, an Internet-based check creation and delivery service, has
agreed to a temporary restraining order to halt what the Federal
Trade Commission (FTC) calls unfair business practices.
The FTC said Qchex creates and sends checks drawn on any bank account identified by a Qchex customer without verifying that the customer has authority to write checks drawn on that account.
Scheming con artists drew checks on bank accounts that belong to others, the FTC claimed
in a complaint filed in a U.S. District Court this week.
The schemes were simple and lucrative for the con artists.
They either used the bad checks to pay for goods and services, or they orchestrated overpayment schemes in which the scammer overpaid an unsuspecting vendor and asked that vendor to wire back the difference.
Qchex did not respond to requests for comment on this article.
However, the company claims on its Web site that all Qchex members are validated before check-sending privileges are granted.
But they also say they cannot guarantee a check will not bounce or be disputed.
Qchex might call that good faith, but the FTC terms it illegal negligence. And if it is an argument over semantics, the front page of the Qchex site indicates a clear winner.
“Due to Maintenance,” the site reads, “Qchex.com will suspend service until further notice.”
Qchex.com principals James M. Danforth and Thomas Villwock are based in San Diego, California.
In this information age, identity verification is one of the great
challenges facing Internet companies.
Last month the FTC levied a $1 million fine on the blogging site Xanga.com for its inability to verify the ages of its users.
Social-networking giant MySpace faces almost daily scrutiny over similar age-verification issues.
Even the Hewlett-Packard leaks investigation scandal orbits around pretexting, where investigators used customers’ personal information to access phone records.
