In July 2003, the Federal Trade Commission charged Electronic Financial Group (EFG) and its principals with providing substantial assistance to numerous deceptive telemarketers by processing tens of millions of dollars through the Automated Clearing House (ACH) network, a nationwide electronic funds transfer system. The FTC further alleged that the defendants conceived and operated two fraudulent advance-fee debit card marketing scams of their own. As part of the settlement, the defendants are banned from processing payment for any telephone-initiated sales through ACH Network transactions.

The FTC complaint named as defendants EFG, EFG Card Services, Inc., Paul McClinton, Jerry Federico, and Randy Balusek. According to the complaint, EFG, based in Waco, Texas, provides a variety of electronic payment services to clients in the United States and Canada. Among it services, EFG processes electronic debits and credits to consumer bank accounts through the ACH Network, a nationwide electronic funds transfer system that provides for the rapid interbank clearing of electronic payments. The FTC alleged that the defendants processed ACH transactions on behalf of numerous fraudulent outbound telemarketing operations - a number of which the FTC previously sued as scams - in violation of the FTC's Telemarketing Sales Rule. The FTC also alleged that the defendants violated the FTC Act in two ways: First, the FTC alleged that in providing ACH payment processing services to outbound telemarketers, the defendants systematically breached a contractual provision with their bank that required EFG to comply with the National Automated Clearing House Association (NACHA) Operating Rules, specifically, the prohibition on processing ACH transactions on behalf of outbound telemarketers, and thus engaged in an unfair practice. Second, the FTC alleged that defendants violated the FTC Act by deceptively marketing its own advance-fee debit cards.

The stipulated final judgment and order, which was approved by the court, bans the defendants, with a limited exception for payroll cards, from the sale, advertising, or marketing of debit or credit cards. It also prohibits the defendants from making misrepresentations or unauthorized withdrawals from consumer bank accounts. The settlement prohibits them from processing any ACH transaction initiated as the result of telemarketing, and requires the defendants to have "express verifiable authorization" before charging consumers' bank accounts.