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FTC Halts Qchex Online Payment Business
Monday October 2, 1:08 pm ET
By Matthew Perrone, AP Business Writer
Federal Officials Say Online Payment Company Allowed Users to Write Fake Checks

WASHINGTON (AP) -- A U.S. District court has ordered Internet payment company Qchex to stop its current method of processing customer payments because it has allowed Internet scammers to write fraudulent checks.

The company had been allowing customers to create and send checks without verifying their permission to access the affected accounts, according to a complaint filed today by the Federal Trade Commission. The commission asked the U.S. District Court of Southern California to issue a permanent restraining order to halt the company's practices, which the agency says violate federal law.

The San Diego-based Qchex allows users to create electronic checks which can be e-mailed and printed out by recipients. While the company had put some security checks in place over the last year, FTC says those practices were "haphazard and ineffective" and that before September 2005, the company did not make "any effort at all" to verify that customers had authorization to write checks from the accounts they identified as their own.

Qchex has voluntarily agreed to a temporary restraining order, FTC said. Services were suspended Monday morning, according to the Qchex Web site. The company did not immediately return phone calls placed for this story.

A subsidiary of the privately held Neovi Data Corp., Qchex competes with online payment services like PayPal, owned by eBay Inc. and the newly launched Google Checkout.

make that competed...