Payments will not be delayed or restructured. The fine money was taken. The "rules" apply to all high risk merchants, so the restructure is for everyone.

Paycom / EPOCH is fighting to stop future fines, etc...

I cant believe you can make those statements. Five years ago I worked for a small adult website he had a merchant account and we would fight chargebacks all the time and win. Why do you think all these awful rules happened, fucking the customer. Lets not play dumb, sites that promise the world and give nothing. Boxes checked that if the customer doesnt read he is fucked and its his fault , thats funny. I could go and on and on, people were in for the short term, they cashed out and didnt care about the mess they left. I understand you have a job to protect but please dont insult our intelligence.

Paycom / Epoch deserves the respect and support of the Industry they are fighting on behalf of. 1% cb's / credits is a joke. Congratulations on your guts and the wisdom to use them for all of us.

You have our support.

Its always something in this business isn't it?

Does this inclusion of returns/credits in the chargeback totals apply to every high-risk MC merchant, or only those that frequently go over 1% with normal chargebacks? Is this a discretionary penalty or automatic and mandatory? Will every high-risk merchant account holder see these penalties anytime they go over the 1%?

I agree that it especially sucks about all that hacked data not being exempted. There is a lot of hacked info available on the net and you will need outstanding fraud control to keep it under control.

I know most of the 3rd party processors offer the ability to block Email domains and suspect countries, but do any offer Email Address verification prior to processing the transaction? Without it, I don't think you can ever keep chargebacks under control. It isn't perfect but in combination with other fraud prevention features it might make the difference needed to comply.

We found that the cause of chargebacks isn't with "recurring billing", it isn't with so called "friendly fraud", it is from taking bad initial transactions. The recurrings on the transactions that never should have gotten by to begin with are what make chargebacks into the business killers. They grow every month. Add all the trickery some of these sites employ, and I am surprised any of the aggregates can survive with out a whole bunch of low-risk transactions somehow being slipped into the mix.

The problem as I see it is that profits have always been the dominant force with the majority of site operators and processors. Neither want to put in place the safeguards or monitoring needed to maintain compliance with the MC/Visa chargeback regs. The fraudulent transactions look too good coming in... it is only when the return as chargebacks that everyone hates them.

I am not surprised that it has taken this long for the cc companies to start getting tough. They have also enjoyed the profits generated not only from card holders paying for transactions they never made, but also from all the fines charged to the merchants once the card holders chargeback.

They must be getting pressured to do something by the present administration.

After reading the lawsuit, a few interesting tidbits:

Mastercard apparently is trying to put Paycom out of business. Mastercard refuses to meet or even discuss these issues with Paycom --- only with their bank.

Apparently Paycom's bank reported a higher chargeback ratio to Mastercard which, Paycom says, was reported in error? Seems like that kicked off a series of never ending fines and penalties.

Mastercard now says Paycom has to host and operate all of the websites that they process for.

This is really interesting to me because when my husband got into the interent biz years ago, there was much debate about whether third party processing was allowed since third party processors were not the actual operating merchants.

Of course I can make them. I've worked all sides of this business and I understand who does what, both right and wrong... and I know who's done what, both right and wrong. IPSPs are NOT the appropriate target for these hyperbolic rants people make, especially since they stand to lose way more than someone with their own merchant account from these issues - they process millions a day between them all, and have to value the good for the masses over what suits and individual site owner the best.

I can also say that the landscape in high risk processing is SO very different now than it was 5 years ago that there is no comparison. EVERYTHING, from fraud control to verification to compliance is totally different and changes more every day.

I also know that the smaller you are, the less apt you are to have cb's since you don't do the same volume of sales as a big company and that has a tremendous impact on the overall picture.

Let's do a little simple math here and perhaps it will shine some light for some of you on how this equation works.

The rule is in regard to having a credit ratio higher than your cb ratio and going over the 1% allowable on a combination of the TWO if MC chooses. (Don't get me started on the settlement that Visa and MC just got where they owe about 3.5 BILLION bucks to the plaintiffs, or WHY they might be looking for money anywhere they can find it...)

So you are cruising along, and your chargeback rate is .495... this is slightly under ONE HALF a percent... no problem you think to yourself, I have a shitload of maneuvering room here, I'm way under, my clients are happy, my CREDIT ratio is .525...

Well, guess what? At MC's discretion, you just busted the cap of 1% combined, AND your credits outweigh your chargebacks...

Guess what? Maybe you'll get fined. Maybe you won't.

If you're doing a couple hundred transactions a month you really aren't going to put them into high cotton if they start slapping $100 per credit or cb fines on you, or if they lump sum fine you... the volume isn't there.

But if you do thousands upon thousands of transactions per month, I guess they'd look at it differently now wouldn't they?

**************************************

At the end of the day, my money says that Epoch isn't the only one facing this problem. Just speculation, but as I said, I'd bet on it, if all companies were making public these figures.

Chris is a no-nonsense , real CEO. Paycom/Epoch has been excellent since Dan Steinberg took his thieving hands out of our pockets. Kudos Mr. Mallick.. while Ibill goes under after Bender and Peterson sold out and left a NOTHING company. These are the people that need a kick in the ass. WSB-holding monies and saying there are CB's that do not exist and get charged $30?

For my monies and why http://www.icecoldcash.com converts well, is Paycom and our own merchant accounts through NetBilling. I am sending Ken some processing soon, to see what he has done for the Flynt's!;-))

Get ready for another "sweep" of the dialers also;-)

Beta testers for FREE dating and Free adult dating wanted.. email me.. http://www.privatefriends.com Thanks :thumbsup

This was a topic last year, when both MC and Visa required many changes on the part of the what are now called IPSPs, along with registering merchants and sponsoring merchjants and collecting fees etc.

Notice that Mastercard didn't play that game since they can't follow big brother Visa everywhere without landing in court.

Wonder how they calculate what to fine the big IPSPs... based on number of transactions I would guess they are getting a fee somewhere in the neighborhood of what Visa did... only in a different way.

I respect your opinion Kimmy. But I can't help but wonder what will happen if you get some judge who joined a porn site and had a terrible billing experience. Let's face it --- there's a good chance of that happening.

We're the adult industry --- not Wal Mart. There's a million horror stories that Mastercard could bring up about the industry's shady billing practices that could easily outweigh any bad things you guys say about Mastercard.

Even if you're right, the adult industry has a bad reputation --- deserved or not. This won't be the same as Wal-Mart taking Visa to court --- that's for sure.

tony404 and nevermind - a few years ago, i had a shemale paysite. no cross sells, no undisclosed terms, VERY easy to cancel, and exactly like the promo said.

we started having chargebacks. i contacted every single person charging back, and guess what - EVERY one of these guys admitted that they had used their card to access the site. all but one admitted that they charged back to keep their wife/gf/boss from finding out they bought a membership in a shemale site. the other one said he just didn't want to pay.

when i told these guys that what they did was credit card fraud, almost every one sent me a check for his membership fees plus the money to cover the ccbill chargeback fees.

if visa/mastercard etc really want to stop chargebacks, they'll have every bank tell each customer that it is fraud to chargeback if what they claim isn't true, and can be punishable by fines or even jail. i bet we'd see a lot less chargebacks. sure, the adult industry does a lot of sales crap - but so does my insurance company and the l.a. times.

good work Paycom, stick it to em :thumbsup

Yeah. But Mastercard isn't threatening to cut them off.

Let's face it ... Mastercard is practically the equivalent of God. If they cut us off ... we're dead.

Ibill has been hit with the same fines recently --- and they're already in financial trouble. PayPal bailed all together, but at least they have Ebay.

Because we're in adult, the industry should have kept things cleaner actually because we're always under scrutiny.

Do you really think a judge is going to sympathize with us and care about our arguments?

I doubt it.

I could stand on a soap box and condemn the recurring billing, the cross billing , the SPAMing and all the other obvious problems with some people in this business. I could find a new soap box and do the same thing for any business type. There are thieves and frauds in every business model and some of them belong in jail.

This move by Mastercard is designed to either shut down this business or just to bleed it to death slowly. They will not discriminate between the honest and the dishonest. We all sink or swim together.

if you earn money in this business or any other business that takes money online for an intangible service you need to get behind Paycom, because if they lose you will need to find a new line of work.

Notice the request for a jury trial for starters :)

You find me 12 people that can sit on a jury and have either never had a problem with a cc company or never charged back a porn membership because their wife found out and I'd say you were on Mars ;)

Yes, we are the adult industry, but you know what? It's in Wal-Mart, Home Depot and Mom 'n' Pop Business owners best interest that this case goes to trial... which it wont. Established precedent on discrimation and unfair trade practices like this help merchants, not hurt them.

This is not about adult industry billing practices, this is about specific things that Mastercard has done to a compliant merchant. If Mastercard would like to bitch about the way we do business then they'd be well off to go ahead and file a counter suit now.

Bottom line is that MC or Visa going thru discovery is like you or me giving birth to a 12 pound baby. It doesn't feel good and if there's anything surgically to be done to make it happen faster and with less pain, we'll do it.

Including settling.

This is why I love KK. She is smart, to the point and she just ?gets it?. In my opinion, she is one of the smartest people in this business and I am proud to have her associated with ePassporte and to call her a friend.

Thanks KK.

C

I said nothing about IPSP's , I said webmasters. Didnt you even take the time to read what I wrote before you started writing back ?

Here are my thoughts on that subject:

(Insert Rant Here)

WTF is the difference? The law is the law. If your house gets robbed, the police come, you file a complaint and the judicial / enforcement bodies take over on your behalf. The same is true if your dildo shop is robbed. ?They? may not be as interested in your loss of dildos from your shop as they are in your blender from your house, but you are entitled to due process - regardless.

In business, it is the courts system. Wal-Mart sells Playboy, condoms, whatever. This is business and there are laws. The judges are surprisingly disinterested in our business or our client?s. In Paycom?s opinion, MasterCard violated a number of laws and continues to put our BUSINESS at risk. So we sued the shit out of them. The courts have already decided MC is a monopoly, so there is no fight there. They have to go into court and explain how it is they calculated our fines and how a chargeback from a porn site is more expensive than a chargeback from Amazon. Why is a credit a bad thing again? The list goes on of these and other unanswerable questions by the Defendant (I love that term) MasterCard.

So, my opinion is that it will not make any difference. This industry can?t and should not hide. Fuck that. If anyone is ?afraid? of what people, courts, judges, whomever think, then get out. If you are feeding your family, employing people, not robbing, shaving, scamming, spamming or deceiving consumers, stay in, get involved and say ?No Fucking More?!

But that?s just my opinion, I could be wrong. (I don?t think I am.)

Bravo Chris, you are very right :)

That's exactly what I though when I read the post....yes in society we are often looked down upon due to misconceptions of our business....but in a court of law this won't become a factor in deciding the case.

You love me? You really really love me?

;-}}}}

That is the problem with 3rd party processing. You *do* all sink or swim together. 3rd party depends on the good guys offsetting the bad. Not really fair to the good guys, and a blessing for the bad guys.

If you are a webmaster that cares about your site, provide your members what you promise and is willing to actually pay some attention to who is joining your sites, you should look into getting your own merchant account.

With quality anti-fraud tools such as are available at Netbilling, and a little attentiveness, you can stay under 1%. We have done it for years with our paysites.

If you monitor new sales as they come in and VOID the unverifiable or highly suspicious transactions before you close your batches they will not appear as credits or refunds - and therefore not affect your 1%.

Our business has different problems than Amazon does. Amazon delivers a product to a physical address. We need to take more precautions when accepting credit card transactions. We need to remove as much of the anonymity from our customers as we can.

If we are not willing to do that, we will have to accept the consequences.

You might not have read the new MC rules. If you are a good webmaster and do the right thing and have a month where you do MC refunds and those refunds and CB's together are greater than 1% of your sales you are out of business at MC sole discretion. So even if you are diligent you are at the mercy of MC.

We have our own merchant account and have had it for years, we never even approach 1/2% in CB but that is because we monitor and refund suspect fraudulent transactions. In this new model that is worse than rolling the dice since not all frauds will turn into chargebacks.

Interestingly enough, the IPSPs have a solution that makes watching trans before batching obsolete... it's called scrubbing and it's based on predictable histories and patterns.

I know when I was at CCBill our scrub accounted for nowhere near what bank declines accounted for in the system.

But um, if you've got millions of compromised Mastercards on the loose that they will allow transactions on since they apparently forgot to tell the issuing banks to issue new cards, AND they hold the merchants responsible for taking these transactions when the BANKS should know they are no good, that is tantamount to deceit in its worst form.

I think all of us can finally say, EPOCH RULES!

GO EPOCH/PAYCOM

sweet!

you're not the only ones who think that visa/mc might just be big fat bullies

the strategy paycom is using of filing suit against MC is the smartest thing i've seen yet, and i will bet MC will settle favorably with paycom.

here's why:

1. it is impossible for adult online to stay under 1% combined for any length of time. MC KNOWS this, and is using penalties to generate income---pure and simple. even if you do EVERYTHING RIGHT you still cannot stay under 1% combined because of human nature---MANY of our buyers feel guilty about buying porn (that's why most of them buy it online and don't walk into a store) this simple psychology makes adult purchases online naturally suseptible to the chargeback reason of "fraud"---many wimpy guys don't like to admit to their wives that they like to buy porn online. buying a membership to a porn site is not the same as buying a computer online---the pyschology of the purchase is COMPLETELY different---many guys buy with a guilty conscience, and their ego (or their wife's ego) forces the chargeback.

and to add another factor, for many, the adult purchase is an impulse type, masturbatory purchase. shoot the load, the need is gone, chargeback the sale---NO OTHER ONLINE PURCHASE compares to this short-lived need. you don't buy a digital camera online to jackoff. you buy a subscription to wifeysworld.com, et al, to jackoff. MC knows this and setups 3rd party billers for the fall deliberately.

it's extortion pure and simple, and mafia style.

2. MC will have to produce EVIDENCE of loss to substantiate the need to recoup their "loss" through the use of penalties---i believe they cannot produce this evidence.

3. as soon as MC settles it should be time to take on VISA.

gotta give Epoch credit for having balls.

jcnlv,

Thanks for the kind words about us.

models,

Suing Mastercard to get your fine $$$ back is one thing. Suing them to change THIER rules is another. It will surely take alot of time and $$$. Many Adult merchants do stay under 1% and that will be the catch in the defenses favor.


Paycom,

Good luck with the suit. All of the billing companies should support you in your cause, just as we supported WSB when they sued Visa.

Mitch

Go get em Epoch :thumbsup :thumbsup

Good luck with it :thumbsup

you gota admit - epoch has balls...

a lot of good points came up here - on both sides.

I'm thinking that mastercard doesn't want to release the list of fraudlent cards mostly because several of epoch's clients are the very same people responsible for using fraud credit cards. That's not saying Epoch would ever use that bad card list for anything other than a scrub list - but knowing that Epoch has clients that would use that list with numberous other processing companies to commit fraud if they got their hands on the list it's probally just too risky for mastercard to let that list out.
Mastercard could easily set up some sort of central checking system though that would allow merchants like epoch to verify if a card is a stolen card quite easily without releasing the list.

just my 2 cent perspective on that........

as for things like epoch hosting the webpage - personally I think this is a good idea. At least there can be some controll as to what happens at the point of sale if this becomes a requriement.

The cross selling issue is a huge point to consider. 99.9999% of all cross sales I would wager are just tricking the consumer. Not good business and risky to continue with condisering the current climate on chargeback ratios. Cross sales are not about a quality product that someone wants to buy- they are about greed. I'd wager that the majority of sites sold in cross sales don't even have any real content in them - they'd mostly full of upsell feeds. This could be totally controlled again by having a 3rd party processer host the join page. Any cross sales on a 3rd party processor controlled join page would be legitimate or at least a lot closer to being legitimate.

reality is - what's it worth? economics says it worth whatever you can get for it. - but then the question of fraud or tricking the consumer comes in. Well you can rent a porn movie for $5-$10. payperview in hotels go as high as $20 a movie. a good porn site (without crappy feeds) can have 100+ real movies to download.... for a month's membership.. $40 is fair for that - a bargain. what isn't fair is leading a person to believe they are goign pay $4 - recurrng at $39 and then having them hit with a $120 bill since there was hard to find boxes pre-checked for a cross sell on something the consumer didn't want in the first place.

so what's it all mean? Mastercard needs to define some CLEAR and DECISIVE rules. The problem is there hasn't been anything concrete. This industry moves faster than rules can be imposed on it and that very fact is in the end gona make mastercard want to simply bail ship. Being a monolopy is actually in Epoch's FAVOR though since as a monolopy mastercard in the end may be legally FORCED to deal with porn since there is no other option.

Personally I hope Epoch wins and gets some clarity on what it can and can't do. Without that clarity anyone who gives them shit for crossselling and the like is basically full of crap since they havn't been told (to my knowledge) not to do any of that stuff.



now I'm going to say something again here - let this sink in.
In the END, I think that Mastercard being a monolopy is actually in Epoch's FAVOR though since as a monolopy mastercard in the end may be legally FORCED to deal with porn since there is no other viable option even if they want to bail out of porn and high risk web transactions totally.

Good luck Epoch.

I might as well say hello.

John

Here is a Fortune magazine article on the recent class-action suit against Mastercard over debit cards and "honor all cards" rule:

http://www.fortune.com/fortune/artic...447339,00.html

Here's my opinion on Visa/MC not cancelling those stolen card numbers.
It cannot be proven that the card numbers are in anyone's possesion or that someone intends to use them maliciously/fraudulently.
The idea of cancelling several million credit cards is insane. That means several million credit card holders would be severly inconvienced. They have to wait a few days for a new card. They have to advise online/telephone banking of the new number. Any pre-authorized payments have to be advised of the new number. This is a huge headache for customers, which translates to a huge headache for the companies. Not to mention the manpower and cash required to cancel and reissue several million card numbers.

Each issuer is aware of their compromised cards, and each cardholder who's account was compromised was advised and offered the oppurtunity to cancel their cards. Many did. And those who didn't, their accounts are being heavily monitored. Any fraud will be tracked and traced. If the card was used online, Visa/MC would go so far as to obtain the IP address from the IPSP and subpoena the ISP in order to determine who had the CC# and how it was obtained, in hopes of catching the hacker.

As to why they don't give Epoch the list? Amongst other reasons, what if one of these cardholders legitimately wants to sign up for something processed by Epoch? They'll be scrubbed.

Also, the majority of stolen cards are not used to purchase online porn memberships.

One last thing to keep in mind: Millions of credit card numbers does not equal millions of active card numbers.

Um, love, MC nor Visa define anything but to their issuers and acquirers. SHOWING the rules as a bank can get you in trouble.

There won't be any clear rules after this suit settles either, just a realization on MC's part that if they push too hard, we, as an industry, will come back at them.

Let's all hold our breath and see if we don't get the 4 plaintiffs needed for a class action. I have a feeling we wont be holding it long enough to suffocate.

What's the criteria for being a plaintiff? Being a high-risk merchant account holder accepting MC?

If B of A called me or mailed me or sent carrier pigeons to let me know that my cards had been compromised but they were sending me new ones overnight I'd be delighted. Not pissed.

But then again what it would cost them to do that would fuck them for the quarter and their public profits, not to mention the backlash.

Get it?

Um, I'm not a lawyer, but as I read it, you'd have to have had your business, or be having your business, significantly impacted by the rules that you will never see.

Some things never change . . .
Good to see you Kim. Have you been to bed yet? :)

psyko - we're all plaintiffs as you know. I've actually been personally named in this suit once . . . but it wasn't a fight I had the resources to take on a few years ago.


Way to go Epoch.

Of course I get it: "Not to mention the manpower and cash required to cancel and reissue several million card numbers."

Anyways, you may be delighted, but others would be pissed. I've had customers give me shit after they lost their card because I couldn't get them a new one the next day. If only I could tell them "Yes, I could get a card sent by courrier to you tomorrow, but you're really not worth it to us.".

Like I said, those whose accounts were compromised were advised and given the opportunity to cancel them. We left the decision to them. Some opted to cancel, others didn't.