ERADs and Prepaid Debit Cards: Civil Forfeiture and You

In Oklahoma, the highway patrol has come under fire for using a device called the Electronic Recovery and Access to Data (ERAD) machine – a device with the capability to see how much money is on any card with a magnetic strip. We should mention right up front that the use of this has been suspended due to widespread criticism. Oklahoma officials are still fighting for its use, but people have become increasingly aware of civil forfeiture laws in general and the potential Fourth and Fifth Amendment violations of these provisions.

What Is Civil Forfeiture?

Civil forfeiture is a set of laws that allows the police to confiscate your money, house or other belongings without trial if they believe that these things are tied to criminal activity. Law enforcement agencies have given their reasons for why these laws are necessary, but many innocent civilians have fallen an unfair victim in what they perceive is just a money-making scheme for police officers.

The concept has been around since 17th Century Europe with the British Navigation Acts, but in America, civil forfeiture truly got its start during the Prohibition Era. Police would routinely seize the cars and cash used by bootleggers to smuggle alcohol into the U.S. However, the practice really took off once the country decided that there was a “war on drugs.”

In response to the influx of illegal narcotics such as heroin and cocaine, Ronald Reagan’s administration decided to criminalize every aspect of the drug trade: use, selling, growing and supplying. In order to accomplish this, sweeping changes were instituted to the criminal code by the Comprehensive Crime Control Act of 1984. Along with many other things, this made it legal for law enforcement to seize any personal property they believe to be involved with drugs. This includes, but is not limited to, your cash, house or car. This also allowed for all of this to happen without so much as an arrest or an accusation of a crime. Many note that this is where the concept of civil forfeiture as an enforcer got its start, and many innocent civilians are the ones falling victim to this expanding practice.

As previously stated, with civil forfeiture it’s your belongings that are on trial, not you. If you tell the officer that you have a $500 prepaid debit card that you got as a graduation gift, that’d be easy to prove. You could show a card, a text, pictures from the ceremony; just about anything that would show you got the money as a present. But under civil forfeiture laws, you would have to prove that you were not going to use that money for illegal activity. That can be extremely difficult to do, especially in Oklahoma, where civil forfeiture laws are some of the worst in the country.

Why Is Civil Forfeiture Such a Problem in Oklahoma?

The reason we’re focusing on Oklahoma is because there have been a plethora of civil forfeiture grievances by their citizens, with particular attention paid to the ERAD device that was being used by police before it was suspended on the 14th of June. Far too many innocent people have had their money taken because an officer’s opinion counts as “verifiable evidence.” For example, a Christian rock band had the $53,000 intended for donation to orphans and refugees seized as “drug proceeds” despite no evidence of such activity being found. The money was eventually returned, but not before a protracted legal battle and public outcry forced the police to do so.

Anyone can admit, $53,000 is a lot of money to have on you. But cash alone does not count as probable cause to believe that illegal activity is going on. Civil forfeiture takes away the oldest provision in the U.S., innocent until proven guilty. Because civil forfeiture allows for your money or property to be taken without an arrest or accusation, you and your things are guilty until you can prove otherwise. As we’ll discuss in greater detail in a minute, that is very difficult to do.

Some politicians in Oklahoma are fighting back against these arcane laws. Governor Mary Fallin just recently signed legislation which stipulated that one could recover attorney fees in asset forfeiture cases. It’s a small step, but it encourages those who have been wronged to fight back against the system. Unfortunately, much more sweeping legislation, the Personal Asset Protection Act, did not even make it out of committee. It would have required a criminal conviction before the government can forfeit property. This problem is not isolated to Oklahoma; many states across the country have seen law enforcement abuse the civil forfeiture policy.

Where Does Civil Forfeiture Money Go?

To set the record straight, it is true that the machines can access personal bank accounts, but they do not confiscate money from there, despite claims to the contrary. They scan personal debit cards to ensure that there’s no identity theft, but they’ll only confiscate funds from prepaid debit cards. But where does the money confiscated using an ERAD device go?

The Oklahoma police have a contract with the manufacturer’s of the device, which stipulate that 7.7 percent of the funds obtained using the device go to the ERAD Group, the makers of the product. Each one costs $6,500 all told – $5,000 for the device itself, and $1,500 for training. On top of that, as much as 100 percent of the money obtained from civil forfeiture is kept by the police. Approximately 70 percent of the $99 million the state seized from 2000 to 2014 went towards police officer salary. This leads many to believe that they are not using the ERAD to fight potential drug crime or identity theft, but rather as a money-making scheme.

T. Jack and Vincent Williams are the presidents of the ERAD Group, which supply these devices to law enforcement. LinkedIn says the company has fewer than 10 employees. Their site does not specify how many agencies in how many states they work with, but ThinkProgress notes in an interview that it’s, “in the hundreds.” The group does work with companies such as Verifone and Mastercard.

In total, the Department of Justice and the Treasury Department has taken in $29 billion between 2001 and 2014, and combined annual revenue grew 1,000 percent during that same period. It’s unclear how much of this money was taken from innocent civilians, but it’s clear that the amount of people who did not commit a crime and yet had their things taken has far surpassed anecdotal evidence.

Has the Supreme Court Ruled On Civil Forfeiture?

The concept of civil forfeiture has reached the high court numerous times, with the plaintiff  asserting that it violates the Fourth and Fifth Amendments, which protect against illegal searches and your property being taken without due process, respectively. One of the early decisions forfeiture of assets was Bennis v. Michigan (1996). Bennis’ husband had engaged in sexual activity with a prostitute in her car, which was then seized. She had absolutely no knowledge of her husband’s actions, but the car was still taken under forfeiture laws. The Supreme Court ruled that this was legal because, even though the car was hers, she entrusted it to her husband who then committed a crime in it. The majority opinion referenced an arcane 1827 ruling, which said that the offense is attached primarily to the thing. Basically, it does not matter to whom the property belongs, all that matters is who was using it.

The 8th Circuit Court of Appeals ruled just a couple of weeks ago that swiping a card does not constitute a physical search, and therefore wouldn’t qualify as being in violation of either the Fourth or Fifth Amendment. This also means that this type of search does not require a warrant. The basics of the case say that the driver was pulled over for following a tractor-trailer too closely and, upon approaching the vehicle, the officer smelled marijuana. The officer deployed his drug sniffing dog, and none were found, but he did find a duffle bag with 50 debit cards and gift cards in it, only ten of which beared the driver’s name. He was convicted on possession of counterfeit devices, and sentenced to 15 months in prison.

There are numerous things wrong with this scenario, however. For one, simply smelling the odor of marijuana no longer counts as probable cause. So right there, a search is unwarranted. Two, opening bags or cases within the vehicle if there is not reasonable suspicion is not allowed. The drug dog did not detect the presence of any drugs, which was the reason for the vehicle search. Therefore, if the bag was zipped closed and not in open sight, it should not have been opened. Furthermore, it was not proven that there was identity theft or the intent to use the funds that may have been contained on these cards to purchase drugs or commit another crime. Some of the cards may have been stolen, but given what we know about the case, it very easily could have qualified as inadmissible, which would result in the dismissal of the case.

Civil Forfeiture Causes More Problems Than It Solves

As previously stated, the case is not against the person, it is against the person’s things. You have to prove that these things are not tied to criminal activity. But it’s pretty tough to mount a defense for an inanimate object. Suspicion is also very subjective, particularly when it comes to the idea that a “large” sum of money automatically means that there’s criminal activity. What amount of money qualifies as suspicious? $100? $1,000? $10,000? Someone could easily have that money on a prepaid debit card as a gift, a loan, or as the funds to buy a car.

This is also very problematic because prepaid cards have increased significantly in popularity, and are often used as a gift, for parents to loan their children money and even for companies to pay their employees. A survey found that 12 million people use prepaid debit cards at least monthly. But according to civil forfeiture, police are allowed to assume that having a handful of these is just cause for them to believe that you are committing a crime.

Many studies have also shown that this practice unfairly targets poor and minority citizens; most of the people going to court trying to reclaim seized property are black or Latino, and they have no means to pay for adequate legal representation. This is the only way police get to keep what they seize, as they’re certainly not trying to take a rich person’s house or car. They are guilty until they can prove themselves innocent, which is very tough to do.

Criminal forfeiture at the very least requires that you be convicted of a crime before your money or possessions can be confiscated. This should be the only way for the seizing of property to take place. Civil forfeiture is a system that is thoroughly abused, and the ERAD devices are just another way for police to have an excuse to take your stuff.

*Featured Image by versageek (http://flickr.com/photos/versageek/7633127888/) [CC BY-SA 2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons