Someone want to post the text? I don't want to register.

Is this anywhere else yet?

The Mastercard ruels effect all high risk (MCC 5967) merchants.

Mitch

I think this is all a bunch of crap... I've joined my share of sites in the last 5 years I worked in this biz.... and I had forgotten a bunch of them that kept rebilling... Then, one day, I find out on my credit card...

on pretty much all big billing companies, all I had to do was enter my email, and my credit card... then all my transactions would pop up... if not, all I had to do was check the email I got in the first place...

if that doesn't work for some reason, the surfer can go and call them;... 24/4 support...

now tell me another business that has that type of support and offer recuring? yeah, the biggest ISP out there... "join for free 1080 hours to AOL!" and then they slap you with 40$ a month... and not only that, when you call to cancel, they ALWAYS try to give you some more time free...


it's not the model that's wrong, it's how people use it... if you don't believe in recuring, what stops you from not using it? every CC processors I know offer non recuring, and recuring... it all is a matter of what you tell them to setup for you.




OH... PAYCOM, Way To Go... it's about time someone steps up!

those who think that cross-sells and "deceptive" billing practices are to blame are sadly mistaken.

first, chris has said that the chargeback rate has dropped, and that chargebacks have no increased since the inception of cross-selling at epoch.

second, "decptive" billing practices are as much the norm in adult as in any other business. i work for Visa customer service, and I get more calls from customers calling about the billing practices of their gym or ISP then from an adult IPSP. i've had people fax me confirmation letters from the gym stating that they're membership was cancelled, however, they continue to bill for months and months after the letter is sent.

everything is fair and legal if it's disclosed to the customer beforehand. a credt card cardholder agreement clearly states that giving the card number and expiry date of the card is the equivalent of giving a signature and entering into an agreement with a merchant. and when the customer checks off the box saying he agreed to the Terms and Conditions of the site, he should have read it. if he didn't, it's not our problem, it's his.

Here you go...

Company Sues MasterCard Over Fees for Online Sales

May 13, 2003
By JENNIFER BAYOT

Paycom Billing Services, a company that processes credit
card and check transactions for online merchants, sued
MasterCard International yesterday, asserting that
MasterCard violated antitrust laws and charged excessive
fees.

The suit, filed in Federal District Court in Los Angeles,
seeks at least $23 million in damages. It signals that
Internet vendors might pursue their own antitrust
accusations against the card network. Last month,
MasterCard settled a class-action case brought by
retailers, agreeing to pay $1 billion and to reduce its
debit card fees, among other concessions. Visa USA, a
co-defendant in the case, reached its own settlement two
days later.

"The publicity from that lawsuit has caused Internet
retailers to question how Visa and MasterCard treat them,"
said Joseph Cohen, a partner at Beirne, Maynard & Parsons,
a Houston law firm. "It's sort of like a shark who sees
blood in the water."

The lawsuit by Paycom, which is based in Marina del Ray,
Calif., asserts that MasterCard uses its market power to
charge Internet vendors excessive fees. Under MasterCard's
rules, online merchants pay much more than traditional
retailers to accept credit card transactions, as much as
three or four times as much, according to The Nilson
Report, which tracks payment systems.

The higher fees apply whenever a customer cannot physically
present a card to make a purchase.

MasterCard has said the higher rate reflects the amount of
fraud on the Web. According to Celent Communications, a
research firm in Boston, fraudulent transactions account
for more than 2 percent of online card spending, compared
with 0.1 percent for in-store charges.

Most of Paycom's billing clients are sex-related Web sites,
which industry experts say are more prone to fraud and
"chargebacks," the term for purchases that customers deny
making. Paycom says it processes about two million
transactions a month.

David Robertson, publisher of The Nilson Report, said
Internet companies were plagued by "friendly fraud," in
which "your perfectly valid cardholder can deny a
transaction he willingly made."

MasterCard, based in Purchase, N.Y., said it could not
comment on the lawsuit because it had not yet been served
with Paycom's complaint.

Paycom's lawsuit also includes a frequent grievance of
online merchants: that they must pay for any losses on
fraudulent transactions. In contrast, any fraud associated
with in-person transactions is absorbed by the credit card
issuers.

Christopher Mallick, Paycom's chairman, predicted that
other Internet companies would join the lawsuit or file
their own.

"I can see this - or something like this - turning into a
class action," he said. "There are thousands and thousands
of merchants being affected by this."

Paycom said it had excluded Visa from its lawsuit because
Visa had worked harder to reduce fraud, instead of leaving
merchants to shoulder much of the cost. Mr. Mallick added
that Visa's penalties for chargebacks were more reasonable.
"Although restrictive, we think they're fair," he said.

Over the last two years, both Visa and MasterCard have
created products that authenticate online transactions.
When online vendors use the new systems, called MasterCard
SecureCode and Verified by Visa, their customers must type
in passwords to make purchases, much as they use personal
identification numbers at teller machines. The merchants
are then no longer liable for fraud; instead, the card
companies agree to pay for losses.

http://www.nytimes.com/2003/05/13/te...9ae4df0d3520b9

http://www.nytimes.com/ads/nytcirc/index.html

Somebody else posted it.

This doesn't thwart my argument. So you forgot your rebills --- which is exactly what rebills are designed to do --- and, like most customers who forget, wanted your money back. The processor presumably refunded your money or you would have charged back.

Just because the processors have been aggressively giving refunds to keep their chargeback ratios low --- doesn't mean there still isn't a fundamental problem with rebills. One way or the other, the customer is going get their money back --- whether it's a refund or a chargeback which, in this case, is pretty much the same thing.

What Mastercard is obviously saying is that refunds have become as much of a problem as chargebacks --- and they can no longer be used to lower chargeback ratios since they essentially stem from the same problem --- rebills.

More Reading:


CBS News MarketWatch
http://cbs.marketwatch.com/news/stor...le&dist=google


New Youk Times
http://www.nytimes.com/2003/05/13/te...partner=GOOGLE


Los Angeles Business
http://losangeles.bizjournals.com/lo...2/daily18.html


Lycos
http://finance.lycos.com/home/news/s...story=34166381


Yahoo
http://biz.yahoo.com/prnews/030512/lam128_1.html






http://www.epochsystems.com/images/r...ner_120x60.gif

Then I'll quote myself here...

That's nuts that those fees & regulations apply to everyone.

The sky is falling again I guess.

I'll jump on the "Way to go Epoch!" bandwagon.

http://206.161.121.14/image_ad/johnstand.jpg

Take that guy for instance... "Try my product.".. "Let me send you my product free!*" (5.95 s/h).. but it's really a free TRIAL - if you keep it for more than 7 days, they'll hit your CC for ~$60. (My uncle wanted to get the Learn windows CD or something.. he was pissed :1orglaugh)

Yeah there are deceptive billing practices everywhere I guess. And what you said about health clubs is very true. I've had a couple health clubs try to continue billing long after I cancelled.

I guess the difference is they have a card swipe or a tracking number/delivered package. Not sure how much this really matters anymore though.

you didn't get my point either :) the argumnent is not that I forgot and asked for a refund... I'm forgetful, I forget my mom's name.... what I'm saying is that porn sites signups are the easiest to cancel of all things I need to cancel... be it cable, ISP, or anything else...

if you're going to fight rebills, then you are going to have to shut down the model of billions of dollar business..


Shut Down MSN.com
Shut Down AOL.com
Shut Down Time Warner... Yes, they rebill you everymonth for access to Television (isn't that the same model as a paysite? get access for a monthly fee, until canceled, to view movies/publicity?)


we processed tons and tons of transactions on our sites... Way less than say CE.... but still gives a good pool to judge from the feedbacks I get..

Not ONCE did I get a user say : What's this on my bill! why did I get charged... NO. Not ONCE did I get someone complain about the charges on the cross sales... But Often I get people asking me where to cancel, I show them how, and question resolved. Often I get people asking what their passwords are... or what was that url again for the bonus sites I signed up to...


People ask for credits for not being able to access the site like they thought, or not getting what they wanted exactly... should that be considered negative? NO WAY... every day you go at walmart, buy something, and bring it back because it's not what you wanted exactly in the first place... ALL stores have a customer service departement giving refunds or exchange... is that negative? not at all!

Personally I just hope it becomes LAW that a 3rd party processor has to have an OPT IN check box for the spam that's sent out when you buy something. Infractions on this would mean loss of their merchant account. That would cut spam on the internet by more than 1/2.

With the amount of spam I get daily now to email addresses set up for online buying it's getting to the point where these 3rd party credit card companies are going to have the entire internet email system bogged down so much that it will become useless.

I wonder when a credit card processor will have the balls to step up and offer it's website clients a cut of all the spam revenue they take in? Looking at the amount of times that spam list gets sold I'd bet dolars to donuts that it's more revenue per sale than the actual processing fee they charge us.

Ok ... well ... if it's so easy to cancel ... (which certainly has NOT been my own personal experience)

I think it's pretty funny that you forgot to cancel ... considering how supposedly "easy" it is ... LOL

When I've joined sites where I didn't want to be rebilled, I like to cancel right away because I don't want to risk forgetting like you did ...

Of course, finding the cancel button or area is always a challenge ...

And, most of the time I can't do it immediately. The form won't process. I call. They tell me the transaction hasn't been processed yet ... wait an hour or two to cancel they say ...

So I'm waiting around half the day to see if the form will finally process and let me cancel before I forget ...

Or, I have to fill out some form asking why I want to cancel ... well ... I want to cancel cause of the rebill! I can't believe I have to explain this or anything else for that matter ...

Then, when I finally see the charge on my card a few days later ... there's another bogus $1 handling charge or something like that ... so I have to call again ...

They say it's in the TOS or something. Of course, the charge wasn't in the banner headline advertisement or billing option I selected.

And, after all of these hassles, I'm rewarded with a ton of spam --- including child porn and beastiality! Fun!

By this time I could care less what the site has to offer. I'm totally pissed off!

I've experienced these kinds of problems with all of the processors BTW ...

Easy? You say? NOT!

I didn't let the rebills go because it was hard to find, but because I get sidetracked and go on other stuff...

when I need to cancel, it always is easy..

thread about epoch, let's take it as an example...


I could paste the list of guidelines you have to follow here... it clearly states that you NEED to have a email contact on the member's area , as well as a link to http://billingsupport.com which is where they cancel..

so the surfer can do it from our page...

if that's not good enough, the surfer gets a transaction receipt in their email, that explains how to cancel...

are you even offered that option with mainstream business? no , you have to call there..


Ok... you don't like their surveys... tough luck... you are leaving us, we'll at least get what's worth from you... your input as to why you cancel... well, most company I know do that... either by calling later on the phone, or by sending a survey card or something similar...

btw, I dunno any companies that charge handling fees... maybe except ifriends (1$ signup, displayed as handling fees..)


I do agree spam has to be monitored for that CP and bestiality shit..

but do you use tampons, sanitary wipes, hair regrowth products, baby diapers, or immodium for your bad bowels? chances are you don't... but you will always get that publicity either in your mail, or on tv...


but it's futile to keep discussing this, you have your point of view, I have mine... I just agree 100% with what epoch does, and back up the model we use, 'tis all
:thumbsup

Very true.

If you look at it that way, issuing credits/refunds is a part of doing good business. I would think any industry would have credits/refunds outweighing their CB ratio.

I read the lawsuit text... MC will probably lose this one. Hopefully that will be a good thing for us.

Why is everyone discussing the chargeback/cancellation/credit issue?

There's a lot more than that at stake in this suit.

The horse is dead, please put down the stick and go on about your business.

All 5967 accounts fall under these rules, however MC can arbitrarily decide when and how they want to collect additional punitive damages based on which way the wind is blowing, whether the moon is full, or depending on what they're having for lunch in the company cafe...

We've all pretty much read IBills woes with fines, since Intercept is a public company... and I cant imagine that the other processors aren't having issues, since on volume, it is physically IMPOSSIBLE to stay under the ridiculous combo limits they are using to generate additional revenue to line their pockets with.

Kim, has any federal or distric prosecutor tried to hold MC or VISA liable for distributing obscene content?

shouldnt everyone be more concerned with the effects of this suit rather than why they are doing it (who is right, will they win, etc)? i personally think that 3rd party processing will be a casualty of this lawsuit. the suit is a good thing becuz MC (& Visa) have been TOTALLY unjust in their practices against net merchants across the board (especially adult).

BUT this will ultimately squeeze out smaller companies that do not have or cannot obtain their own merchant account AND maintain the staff & other necessities to maintain an acceptable cb %. accountability is the issue here IMO & this is will end up being the ultimate big squeeze.

if you're using 3rd party, find other means of revenue. quick.

Good question, I don't know the answer... I think it's more of a brand image thing for Visa than anything legal... MC I think is just trying to reap as much off as many as they logistically can ;)

And no, I don't think that third party or IPSP billing will fail due to this lawsuit, not at all, frankly. I know that another biller sued Visa awhile back and is still processing Visa transactions... I believe the suit was settled out of court, though I don't know the details...

And if MC were to attempt punitive action as a result of this suit being filed, it would appear to be a slam dunk with any judge to get injunctive relief pretty quickly --

Next time you get down to Austin we'll have to go have another beer lunch . . . I might have some interesting info on that. The issue came up in my lawsuit.

I disagree rebilling is not just limited to Adult sites many, many different types of business use this business model:- 24 hour fitness, Frogs gym, Gold's gym, all use automatic CC re billing. Cingular (SBC) many many online and off line companies and they don't get a bad rap. Also compared to some industries the adult charge back rate is very low. For example online watch sales have a charge back rate of around 6% and the fraud rate is astronomic. Visa and Mastercard don't impose harsh fines on these businesses .

The adult industry has some bad apples but over the last 6 years more and more webmasters and site owners are running their business in a much more professional way, its not perfect i doubt it ever will be but we are being singled out as the bad guys by Visa and Mastercard because of the sins of the past and they are not looking at the present standards by which most people in this business operate
Ok rant over
Cindy xx
:2 cents:

If you've got anything on it, drop me an email -- [email protected] -- I'd definitely be interested in seeing it --

How's it going in Austin anyway? That's the only part of Texas that should be allowed to exist, imo ;)

Very interesting point, does anyone have any feed back on this?

It's not just about third party...

Maybe its because I am in a niche but never had a problem with rebills. My customer seem to know to cancel the moment they join so they dont get rebilled. The only annoyance I get is very picky guys who compare us to huge sites like Score or Hustler. I say I am sorry their are not happy and I refund them even if they didnt ask for it. Its not worth the pain and I know I cant fight even if the guy has been in the site 6 times. Think the customer has been allowed to have no responsiblity for what they do. I just hope Paycom is ready when Mastercard goes thru all the adult website horror stories( I bet there are alot of them). A jury would be quicker to go in favor of MC which is in their pocket, then the processing company that helps pornographers. They already said in the press they are protecting the consumer, unfortunately the jury will be made of consumers. Also what happens after the case and if Mastercard then decides to say fuck you no more adult processing ? I wish Paycom and Chris the best of luck, I am just saying better have your shit together because you are going up against a shark.

Funny Kimmy. I remember this quote from you on this board when the Visa fees first hit.

The most important point of all. WHY this is happening. Well it's pretty fucking simple. You take a bunch of cheats and thieves, let them get access to peoples credit cards and then watch what they do. XPICS among others comes to mind for me, though I'll keep the other names quiet since alot of them still do business today.

It's not just Visa that is sick and tired of the fraud and the cheating, it's the banks themselves. 95% of banks DO NOT accept high risk transactions but due to the fact that they are grouped with other banks that do, they become potentially liable for losses incurred by the banks that do take high risk.

This is a high risk business, not a fucking free for all. Visa, and soon to be Mastercard, are well within their rights to do this, they are for profit companies, as are the banks that issue and acquire cards.



I guess your opinion has changed since you now work for Epoch?

First off, I don't work for Epoch. I have a contract to market ePassporte, which is a separate company entirely.

Next off, finding a post I made regarding people with their own merchant accounts and attempting to apply it to an IPSP/aggregator situation such as this one is grasping at straws, on a good day.

There are plenty of people who've ripped off surfers. No one is denying that. No one has tried to say otherwise.

Your repetitive ranting about rebills and how bad they are prompted my comment, and if you start on that track again, I'll quote myself ;)

To take my comment you quoted a little bit further -- let me add this to it --

VISA should and does seem to, LOVE, the IPSP model. Why, you may ask? Because it creates a bottleneck around the transactions where they can control the content and the system much more easily than with folks running around using their own merchant accounts in ways that are completely out of compliance and possibly fraudulent.

The IPSPs aren't going to commit fraud on behalf of one big customer -- they stand to lose way too much with the rest of their customer base if they get caught.

How much more simple can it be?

To Clay and the the Team at Epoch

Yesterday I read most of your legal brief, and I must say you and your team and your lawyers have hit the nail on the head (many many times actually)

I hope the other IPSP's out there take a leaf from your hat and join you in your defence our our industries rights

I wish you all the best, and I look forward to discussing some biz with you in August at the show

Regards
Daniel

That's a good point. Most of the women probably won't be sympathetic since it's a porn company. And the men will probably want to preserve their power to dispute charges.

I wonder if Epoch can actually sue Mastercard anyway. The lawsuit repeatedly states that Paycom's merchant account is actually with their "Acquiring Bank," not directly with Mastercard.

Granted, Mastercard is calling the shots through the Acquiring Bank --- but I wonder if, from a legal standpoint, the bank should be sued rather than Mastercard?

KK, I'll catch you later this evening . . . I've got to run off to some meetings for a few hours.

Yeah, what the fuck were either of us thinking living in Dallas? I'm going to stay put here in Austin . . . come visit anytime :)

nevermind


You are making a lot of incorrect assumptions.

No problem sweetie, if you don't have my icq it's 10169619 --

I've got a charity meeting in a couple hours that I can't miss, so I'll be around after --

quote:
--------------------------------------------------------------------------------
Originally posted by tony404
A jury would be quicker to go in favor of MC which is in their pocket, then the processing company that helps pornographers. They already said in the press they are protecting the consumer, unfortunately the jury will be made of consumers.
--------------------------------------------------------------------------------


Should that even be relevant? Why should the jury know this? The jury should not be told what they process.. so they can look straight at the facts.

Quote from Epoch CEO Chris Mallick in January, 2003 GFY thread regarding cross sells potentially causing problems with Mastercard and Visa:

http://www.gofuckyourself.com/showth...+ cross+sells

We are not trying to give the industry a bad name or bring down heat. We are running our business just fine, thanks. As for credibility, we have as much as can be had with Visa and MC. We are CISP compliant, Verified by Visa, no FTC problems, no chargeback issues, acquiring through some of the biggest banks on Earth? and we don?t have any volume restrictions. So I think we are doing fine.


Quote from Paycom lawsuit filed yesterday:


Paycom began settling its MasterCard transactions with its current Acquiring Bank in June, 2001. Since it's relationship with that Acquiring Bank began, Paycom has experienced Chargeback Ratios in excess of MasterCard's 1 percent Chargeback threshold in the months of August, September and December of 2001, and January, February, March, April and May of 2002.

Then, Paycom says they were compliant after June of 2002. But that additional chargeback overages were reported in "error" by their Acquiring Bank --- resulting in additional fines and penalties levied this year.

yeah AOL's business isn't in the toilet due to their free trial CD and recurring. They have a market cap of 60Billion last time I checked. There are other factors that put AOL's business in the toilet.

Well unless they live in a cave they will know, I quote the NY Times article :
"Most of Paycom's billing clients are sex-related Web sites,
which industry experts say are more prone to fraud and
"chargebacks," the term for purchases that customers deny
making."

And you have a problem with the verity of this statement?

Let's all try to keep in mind there's this magical process called discovery, which my friend scoreman referred to in an earlier post.

For those of you either unfamiliar with how a civil suit works, or perhaps simply trying to ignore it, discovery is a process that happens prior to going to court.

Plaintiffs attorneys and defendants attorneys get to question all relevant parties, in a location agreed upon by both parties. These sessions are usually 4 hours for each side to question the person being deposed, and the questions are NOT restricted to what might be admissable in court.

Things can become very messy very quickly for someone who doesn't want certain things to be 'discovered' and obviously Paycom realizes that. Especially since they are already involved in action against their former ISO, Payment Resources...

Making statements that wouldn't hold up would be a very bad idea for them all the way around now wouldn't it?

And I'll be happy to refer you back to my math earlier, nevermind...

I don't care what IPSP you are, if the combination rule is invoked, I'd bet my money that NO ONE is getting out without a fine.

True dat. ;)

This will become a very active part of the the MC defence team's argument. Why? It's simple. Paycom is saying that they are being unfairly treated when it comes to how refunds, cancellations and other consumer activites are being added to their Chargeback ratio. And as a result, fines are being imposed on Paycom and other 3rd party billers which Paycom feels are unfair.

It will then be the MC defence teams job to show what is causing these innocent sounding "refunds".

Here's just one example that they could use (this particular one is not Paycom-it's IBILL..but give me a minute and I will find a compariable site):

1) http://www.indianhussies4free.com
Banner says FREE FREE FREE FOREVER

2) Clicked on banner...hmm, what's this...already it's not FREE FOREVER, it's a 1 day trial

3) O.K. I clicked on the instant access, to take advantage of my 1 day trial (even though I originally thought it was free) Oh my, there is no 1 day free membership. The only choice, which has been pre-checked for me, is a $39.95 one month membership.

And some of you are still questioning why Mastercard HAS TO come down very hard on this industry....