Will Out-of-State Residents Avoid Okla. Because of Seizure of Prepaid Cards?

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A few signs emerged this week that some out-of-state residents could suspend their travel to Oklahoma because of law enforcement agencies’ use of a device that seizes funds loaded on to prepaid debit cards.

As Oklahoma Watch first reported Tuesday, the Oklahoma Department of Public Safety and other agencies have portable card readers mounted on vehicles that can confiscate or freeze suspected drug-trafficking proceeds loaded on to prepaid cards.

The Electronic Recovery and Access to Data devices are on Oklahoma Highway Patrol vehicles and also are being used by a joint law enforcement drug interdiction team under the Oklahoma County District Attorney’s Office.

Two people contacted Oklahoma Watch or a state senator who has pushed changes in civil asset forfeiture laws sand said they would suspend travel to the state because of concern that funds on personal or business payment cards could be mistakenly seized by officers.

In a June 9 letter to Sen. Kyle Loveless, R-Oklahoma City, Derek Goldberg, principal with Florida-based Peak Power & Mfg., Inc., said his company and its affiliated companies had banned employees from traveling to Oklahoma.

Employees of Peak Power & Mfg., which designs, builds and installs automated manufacturing equipment, often travel across the country and carry personal and business banking cards.

“We simply cannot risk seizure of our employees’ and our company’s assets based upon the whims of an honorable, dedicated, and well-intentioned Oklahoma Highway Patrol Officer,” the letter states. “We look forward to the time when the state of Oklahoma discontinues this practice that we may remove our travel ban.”

In an interview with Oklahoma Watch, Goldberg said he was unsure whether the cards carried by company workers were prepaid cards, which can have funds seized by the device, or non-prepaid cards, from which the devices cannot freeze or seize funds.

The devices are not capable of seizing funds associated with checking account debit cards or credit cards, but they can capture and store data from any card with a magnetic stripe.

Department of Public Safety officials said the department has 16 of the devices as of Wednesday. T. Jack Williams, owner of the company that manufactures the devices, ERAD Group Inc., said hundreds of law enforcement agencies across the country have the devices.

Another out-of-state resident, Laura Phares-Wilson, a Colorado alternative radio program host, also made her concerns known, calling Oklahoma Watch.

Phares-Wilson said shortly after making plans for a family trip to visit relatives in Anadarko, she read news of Oklahoma law enforcement possessing the card reader devices. Although she and her family mostly use cash to make purchases, Phares-Wilson said they also load some funds on to prepaid debit cards in case of an emergency.

Coupled with driving a car with license plates from Colorado, where marijuana is legal, Phares-Wilson said she and her husband canceled their plans out of concern that their cash and funds on their debit card could be seized.

“In a Colorado car, the chances of getting pulled over are very, very likely,” Phares-Wilson said. “Can you just imagine us being pulled over and seizing our car and all our money and stranding us 700 miles from home?

“If there’s any chance of anything like that happening, we’re just not going to go,” she said.

The Department of Public Safety and Williams, the inventor, said that law enforcement agencies will not use the device to take funds from law-abiding citizens who happen to have a single debit card, only from those who give officers probable cause to believe they are drug couriers.

“That (seizing single cards without probable cause) is not what we’re going to do at all,” said Lt. John Vincent, spokesman for the Oklahoma Highway Patrol. “If there are reasons that give us probable cause to believe a crime is being committed, then we’re going to check everything.”

Prepaid cards have become a major method by which drug cartels, human trafficking groups and terrorists transport illicit funds. The cards allow couriers to avoid law enforcement detection and reduce the likelihood that the funds will be seized, Williams and the Department of Public Safety said.

The main purpose of the devices are to provide law enforcement with intelligence, such as determining if a card’s magnetic stripe has been altered to put funds on it, and forensic analysis, such as looking for trends associated with card issuers or where the funds are coming from, Williams said.

“The seizure stuff is really secondary, even tertiary,” Williams said.

Williams, who also invented the first electronic gift card program while working for Blockbuster Video, said freezing or seizing funds from prepaid debit cards is not the same as freezing or seizing funds from bank or debit cards because prepaid cards come from pooled accounts held by financial companies.

“Prepaid cards are cash, they are not bank accounts,” Williams said. “Prepaid cards are held in pooled accounts not protected by the Bank Secrecy Act, so it’s cash.”