Law Enforcement Agencies Using New Card Reader To Seize Prepaid Card Funds

Image courtesy of Ciaran McGuiggan

Millions of unbanked consumers unable to open a traditional bank account have turned to prepaid debit cards in recent years. But now these reloadable, and often untraceable, cards have also become a method of choice for criminals to transport a large amount of cash from one place to another. A new device aims to make it easier for police to seize these ill-gotten funds, but some advocates worry the card scanner could be putting legitimate prepaid card users’ civil rights at risk. 

Oklahoma Watch reports that the new portable card scanners are being used by police departments in Oklahoma with the aim of disrupting drug trafficking operation in the state.

The devices, made and sold by the ERAD Group Inc. (Electronic Recovery and Access to Data), are a new tool for police officials who, under state and federal laws, are allowed to seize property and cash believed to be involved in the drug trade.

The vehicle-mounted devices work when a police officer takes a prepaid card and runs it though the machine. At that point the information and cash on the card — which can be just about anything with a magnetic strip, not just prepaid cards — can be frozen, preventing withdrawal or use of the money in the account, or it can be seized and transferred to a law enforcement financial account, Oklahoma Watch reports.

Officers also have the ability to seize the funds from a financial institution holding the money loaded onto a prepaid debit card.

The device, while it doesn’t allow non-prepaid card funds to be frozen or seized, does provide officers with information such as the card number, name of the account holder, expiration date, and card issuer for traditional credit and debit cards.

All of this data is then stored in a case management database for future use.

So far the Oklahoma Highway Patrol says it hasn’t used the devices for seizures, but have been able to use the readers to uncover cases of identity theft. Should the departments seize funds, ERAD is entitled to a 7.7% cut.

While law enforcement officials say the readers are a welcome tool, advocates say the devices put law-abiding individuals’ rights at risk.

“I think this is likely to expand pretty radically the scope of civil asset forfeiture procedures,” Brady Henderson, legal director for ACLU Oklahoma, tells Oklahoma Watch of the possibility that the devices would violate the Fourth Amendment. “This is a capability that law enforcement has never had before and one that is very likely to land [them] in litigation.”

The departments using the devices contend that they will not be used to randomly swipe cards of every motorist stopped. Instead, they will only be used in cases in which the officer suspects criminal activity is taking place.

“If we have reasonable suspicion to believe there’s a crime being committed, we’re going to investigate that. If someone has 300 cards taped up and hidden inside the dash of a vehicle, we’re going to check that,” Lt. John Vincent, public information officer for the Oklahoma Highway Patrol said. “But if the person has proof that it belongs to him for legitimate reasons, there’s nothing going to happen. We won’t seize it.”

Still, Henderson says the new technology, which was actually created in 2012 for the science and technology arm of the U.S. Department of Homeland Security, is something he and other advocates have never seen before.

Typically, when the freezing or seizing of money is needed, officers have “all kinds of steps where courts get involved so that there’s a check and balance” system. With the new readers, that’s not the case.

Lawmakers in Oklahoma have also expressed concern over the devices, citing constitutional and due process implications.

“Until this, we didn’t even know these things were in existence,” Sen. Kyle Loveless, of Oklahoma City, tells Oklahoma Watch. “It’s scary to know that technology even exists and that government agencies are using it without an arrest without a warrant.”

New Front In Civil Forfeiture: Devices To Seize Funds On Prepaid Cards [Oklahoma Watch]

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