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Illinois Sues Medicare Discount Card Scammers

September 22, 2004
Illinois Attorney General Lisa Madigan has filed suit in federal court against a group of companies - including two Canadian telemarketing firms - that used confusion over a new federal government Medicare discount prescription drug card program to drain money out of consumers' checking accounts after persuading them to give up sensitive financial information.

An investigation by Madigan's office found that some 103 Illinois consumers were billed nearly $90,000, which was debited out of their checking accounts after a smooth and aggressive sales pitch led them to provide to the salespeople the bank routing information from the bottom of their checks.

Named in the suit are Global Benefits Group Corp., International Marketing Service and Medications 4 Less, Euro Banca and several individuals.

"Unfortunately, new programs bring new opportunities for fraud. con artists taking advantage of the confusion created during the first stages of the Medicare card sign-up have victimized elderly, and often low-income, Illinoisans - some of our most vulnerable residents," Madigan said. "The large number of cards being offered and the complexity of the program allow these scam artists to sneak in, potentially undetected."

According to the lawsuit, Global Benefits acted as the conduit for Canadian and other telemarketers, including Medications 4 Less and Euro Banca, to debit money from consumers' checking accounts.

Under one variation of the alleged scam, Illinois seniors received calls from Canadian telemarketers who offered savings of 50 to 80 percent off of their drug purchases, leading them to believe the callers were referring to the federally approved Medicare discount drug program.

In another variation, the telemarketers promised a low-interest credit card. In all cases, the telemarketers asked seniors to read information from the bottom of their personal checks, enabling the telemarketers, using desktop software, to create what looks like an actual check from the consumer's checking account. The consumer does not sign the check. This process is legal under federal law if consumers provide the proper authorization.

Madigan noted that some consumers simply deny having provided authorization for debits from their bank accounts. Many consumers did not understand that once they read the numbers at the bottom of their checks, the telemarketer would be able to take money from their checking account.

Other consumers specifically told Medications 4 Less to wait until a specified date to debit the money from their checking accounts and believed the money would not be taken until that date. However, once consumers provided their checking account information, their accounts were debited for the Medications 4 Less offer.

In the case of Euro Banca, consumers believed they would get an unsecured credit card. Consumers provided their checking account information to pay a fee for the card, but when they did not receive the promised credit card, they began asking for their money back.

Global Benefits arranged for Medications 4 Less, Euro Banca and dozens of other telemarketers to have access to check debiting services, enabling them to take money from consumers' checking accounts merely by convincing them to read the numbers at the bottom of their checks.

By the end of May, approximately 22 Illinois consumers were billed for the Medications 4 Less offer and approximately 81 Illinois consumers were billed for the Euro Banca offer.

Madigan's suit seeks a nationwide injunction against the defendants, prohibiting further violations of consumer protection laws. In addition, the suit seeks from each defendant a civil statutory penalty of $50,000, additional civil penalties of $50,000 per violation found to have been committed with the intent to defraud and reimbursement for the costs of prosecution and investigation.

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