EDebitPay is pleased to announce that it has successfully concluded its litigation with the Federal Trade Commission.  As part of the settlement, EDP essentially released, to the FTC, the funds that the Commission was able to freeze, without notice to EDP and without EDP having any opportunity to address the inaccurate allegations and claims contained in the complaint.

On August 1, 2007, EDP was served with a complaint and Temporary Restraining Order (TRO) that was filed by the Federal Trade Commission, without notice to EDP.  On August 13, under the supervision of a court appointed Temporary Receiver and with full knowledge of the FTC, EDP resumed business operations, marketing the same products through the same channels as pre-TRO.  To say that the resumption of operations under these circumstances is “rare” would be an extreme under-statement and is a testament to EDP’s business practices. 

“We know we didn’t do anything wrong,” said Paul Cleveland (CEO), who was personally sued by the FTC and whose personal assets were also frozen without notice.  “But the economics of fighting the case and trying to get our money back just didn’t make sense. Once the FTC allowed us to resume our business, less than two weeks after it ambushed us with the court order, our sole focus was to resolve the case and move on with what the FTC now knows is a very legitimate business.  We were able to put most of our employees back to work and, at least, save them from being out of work for who knows how long.”

EDP continued to operate, legally, legitimately and profitably under the oversight of the Temporary Receiver, through January 23, 2008, the date the Settlement Agreement and Order was issued by the Judge.

Addressing the claims that EDP took money out of consumer accounts without their knowledge and that consumers did not know the cost of the card, EDP’s defense counsel, Michael Mallow, noted “Do you really think the FTC would allow EDP to resume business two weeks after shutting down the company if they actually believed that my clients were thieves?  All transactions were authorized and the evidence clearly established that consumers saw the price disclosures.”  The evidence included electronic statistical data establishing that consumers applied for twice as many cards when the only change to the website was a reduction in the price.  “The only explanation for this dramatic increase in application conversion rates is that consumers saw the lower price and recognized it as a better value,” Mallow concluded.

The FTC made several serious allegations, publicly available for viewing online, and provided EDP with no opportunity to answer the allegations or defend itself prior to being served with the TRO.   During the course of preparing its court defense, EDP assembled ample proof that these allegations were just not true, and the Company believes this evidence motivated the FTC to settle.  EDP was operating under the strict compliance and scrutiny of its issuing banks and card networks, believing that all materials were being properly presented to the consumer.  Under the terms of the settlement, EDP has essentially promised to follow the law, which has always been its intent since inception.

“Although the experience was very costly and painful, we are emerging from our dealings with the FTC as a stronger, more efficient and more knowledgeable company,” said Bill Wilson, President of EDP and also a defendant in the case.  “At this point, we aren’t just trying to do things right, we KNOW we are.”

Ironically, the FTC has, itself, utilized Prepaid Debit Cards as the vehicle to provide consumer redress as part of a recent and unrelated settlement agreement.  The Treasury Department is beginning to utilize Prepaid Debit Cards to make various social and benefit payments to qualified recipients.  Debit Cards are here to stay and the utilization of Debit Cards by governmental agencies will serve to help educate the mass consumer market while bringing ever increasing credibility to the product type.  In today’s environment of excessive credit, Prepaid Debit Cards allow consumers to participate in the American economy without creating expensive credit card debt and its associated high finance costs.

The online marketing and sales arena is moving forward at the speed-of-light.  Much of the World’s infrastructure is trying to catch up and seems to be moving at a slower sub-sonic speed.  Partially due to a lack of understanding, online advertising faces more scrutiny than other forms of media.  All online marketers and data gatherers are vulnerable to the interpretations of out-dated and vague standards, policies and laws, as they may be selectively applied by various regulatory agencies.

EDP thanks its many loyal Affiliates, business partners and internal staff for always believing in the integrity of EDP and helping the Company to survive this unfortunate event.  We intend to remain an industry leader and will provide such leadership and knowledge to our continued and growing number of Affiliates and marketing partners.