Utilities Payment Service Settles Investigation

Attorney General Spitzer announced a settlement with a Brooklyn and Queens-based company that defrauded low income residents of tens of thousands of dollars. Electro-Pay, Inc. was a business that advertised and held itself out as a payment center authorized by several utilities to accept payments from their customers. Consumers would pay utility bills directly to Electro-Pay, usually in cash, with the understanding that the company would forward the money to the appropriate service provider. Electro-Pay charged a one-dollar per payment fee for these services. Although the company accepted payments on behalf of several utilities and other companies, it was only authorized to accept payments for Con Edison, Inc.

Electro-Pay operated storefront payment centers at three locations: 1360 Fulton Street in Brooklyn; 411 Rockaway Avenue in Brooklyn; and 41-61 Kissena Boulevard in Flushing. All three locations ceased operating in February of 2005, after failing to forward hundreds of consumer payments worth at least $50,000 to several utilities. Consumers subsequently received notices from their utilities that their payments were never received, causing them to incur late fees, and bounced check fees, and to receive termination and even collection notices. When consumers tried to contact Electro-Pay, they found its telephone lines disconnected and its doors locked.

Most of the money that Electro-Pay failed to transfer was intended to go to Verizon, Inc. After discussions with Spitzer’s office, Verizon credited the accounts of customers who had made payments to Electro-Pay, even though Verizon never received the money.

Under the agreement entered into with the Attorney General’s office, Electro-Pay is permanently prohibited from operating a payment center, or from accepting and transmitting consumer payments to utilities or other companies. In addition, Electro-Pay must pay $10,000 to New York State in fines and costs, and $27,085.41 to Verizon for money Verizon lost as a result of Electro-Pay’s actions, $2,914.59 will go to 24 consumers who were not Verizon’s customers.

The Attorney General advises consumers to verify that payment centers are authorized to act as agents for service companies, before making any payments by contacting the service companies directly. Moreover, the Attorney General encourages New Yorkers to open bank accounts so that they may pay bills directly to service providers and avoid the fees charged by payment centers. New York State law requires banks to provide accounts with the following provisions: an opening deposit of no more than twenty-five dollars; a minimum balance of no more than one penny; a monthly maintenance charge of no more than three dollars; eight free withdrawals per month, including checks, bank withdrawals, and withdrawals from ATMs; and unlimited deposits at no charge.

The investigation was conducted by the Brooklyn Regional Office and headed by Assistant Attorney General In-Charge Lois Booker-Williams.

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