Amid international controversy, the Oklahoma Department of Public Safety has put a temporary hold on using prepaid card readers to seize or freeze suspected drug-trade funds loaded on to prepaid cards.
DPS Capt. Paul Timmons said late Monday that use of the vehicle-mounted devices was being put on temporary hold until DPS Commissioner Michael Thompson can attend training on the card reader to get a better understanding of the device. Timmons said he does not know when the training will occur.
Earlier Monday at a news conference, Thompson said he wanted to re-evaluate use of the device but that there were no plans to stop using it.
“It’s too good a tool” to cease using, he said. “I personally want to sit through this to get a clear understanding of how this works and get a good comfortable feel before we move forward.”
Held nearly a week after the department’s purchase of the card readers was first reported by Oklahoma Watch, the news conference was aimed at clarifying misperceptions and erroneous information about the devices – brand-named ERAD Prepaid Card Readers.
The state paid $5,000 for the devices and $1,500 for training, and the company that makes the devices, ERAD Group, gets a 7.7 percent cut of any funds seized and forfeited through use of the device.
The story has become national and international news.
As the story spread, incorrect information about the card readers’ capabilities began to appear on social media and other websites, such as reports that the devices could seize funds from personal bank accounts rather than funds loaded on to prepaid cards, which are held in pooled accounts in financial institutions.
However, the device is capable of reading any card with a magnetic stipe on the back and retrieving limited information. This is important when investigating possible credit card fraud or determining whether a cardholder’s information has been placed on another card’s magnetic stipe, Col. Ricky Adams, Oklahoma Highway Patrol chief, said at the conference, which was live-streamed by News9.
“We can do nothing with someone’s bank account. We can do nothing with someone’s debit card,” Adams said. “What we can tell is if it is yours, if the information on the back of a gift card is your personal credit card information.”
According to ERAD’s bid for the state contract, the devices allow DPS officers to determine the amount of money loaded on to a prepaid card and to either freeze the funds or seize them by having the money deposited directly into a Department of Public Safety Account. This can be done during a traffic stop. The funds would then be subject to forfeiture actions in court.
Document: State’s Bid Solicitation for 20 Card Readers
(Description of Device’s’ Roadside Capabilities Highlighted in Yellow)
Thompson said the department will not use the card reader in ordinary traffic stops, rather in cases where the trooper believes that criminal activity is occurring.
“In order for us to use those card readers … we have to have reasonable suspicion a crime has occurred to stop someone, then we have to have probable cause before we can move forward to swiping that card and seeing what’s on the card,” Thompson said.
Asked about determining probable cause, Thompson declined to discuss details, saying he didn’t want to provide information that criminals could use to evade enforcement. In cases of roadside seizures of cash, officers have often relied on drivers’ or passengers’ behavior, such as nervousness and inconsistencies in their answers, as well as alerts from drug-sniffing dogs, including to bundles of cash. With prepaid cards present instead of cash, it’s unclear whether dogs would detect drugs as often.
Thompson said law enforcement agencies in at least 25 states have ERAD devices. The inventor of the device, T. Jack Williams, told Oklahoma Watch last week that hundreds of law enforcement agencies around the country have the device.
So far, no prepaid card funds have been seized by the Highway Patrol using the devices, Thompson said. The department’s use of the devices is to combat criminal organizations that have taken to using prepaid cards as a way to fraudulently obtain money or disguise illicit operations, such as drug or human trafficking.
“If we didn’t have this technology … we would lose out on the ability to help people that live and work here, or the people passing through here,” Thompson said.
Thompson said the device also does not violate the Constitution, citing recent Sixth and Eighth Circuit U.S. Court of Appeals rulings.
“For the folks who have said this is an unconstitutional practice, that’s simply not the case,” Thompson said. “This card reader technology has been challenged all the way to the Sixth and Eighth Circuit, and it’s been ruled constitutional.”
In a May 2016 presentation to the West Coast Anti-Money Laundering Forum, ERAD inventor Williams cited two relevant Sixth Circuit appeals court cases – one from 2013 and the other from 2015 – to show the constitutionality of the devices. A third relevant case was decided by the Eighth Circuit appeals court last week.
Those three cases dealt with Fourth Amendment questions on whether law enforcement can obtain information from cards’ magnetic stripes without a search warrant. However, the rulings do not touch on whether funds from cards can be seized or frozen by law enforcement prior to a court order.
Adams said he was irritated by the spread of incorrect information about the devices, and that attacks on the use of the devices benefit criminals.
“The misinformation that’s being put out and the Internet assassinations that are going on on this process – this is a system that’s been used around the country. We’re not the first to have it,” Adams said. “This is a good practice and really the only people being benefited by the attacks on it are criminal organizations.”
Thompson said he was concerned that the recent publicity and incorrect information about the device’s capabilities could erode the public’s trust in the Department of Public Safety.
“I don’t want anyone to use what we’re trying to do with this technology to help people in Oklahoma to be used as a tool against us,” Thompson said. “Trust and confidence may sound like a cliché, but it’s the only way we can do our job in this state.”