|
CardService Accused of Theft by Negligence
|
Jim Moore
|
Dec 22, 2002 21:15 PST
|
CardService Accused of Theft by Negligence
Hackers tried but failed with 8,000 fraudulent transaction attempts, but
the merchant still took a hefty hit in merchant account fees
December 2, 2002 -- Branding expert Rob Frankel, of Frankel & Anderson,
Inc., is fighting mad. He is not, as he will tell you in a minute, a
whiner. But he asks a very simple, reasonable, but pointed question.
"Why can't merchants get the same level of protection as consumers?"
Frankel is a former customer of Cardservice International, a merchant
account provider that appears to specialize in small businesses and
microbusinesses, including problem credit companies. His gateway
provider is Authorize.net. He followed all the approved security
procedures required and recommended by both providers. His operation was
as secure as he could make it.
Nevertheless, back in September, some unknown person made 8,000 purchase
attempts through his system in a 24-hour period, apparently testing
randomly-generated credit card numbers in hopes of finding a valid one
with which they could steal cash and merchandise. Fortunately,
Authorize.net was watching and flagged the attempts as probable fraud.
All were declined and Authorize.net did not charge Mr. Frankel for those
transaction attempts.
Cardservice International did.
Cardservice International charges a per transaction fee every time they
do what you have actually contracted with them to do: move money from
somebody's revolving credit account to your bank account. However, they
also charge you every time they are notified by your gateway provider
that they are going to have to make that transfer, whether the
transaction is actually consummated or not.
"What most people don't realize is that every time anybody dings your
account, they charge you for it," explained Frankel during a telephone
interview last week. Because of that, Cardservice International billed
him $2,600 for those fraudulent transaction attempts, even though the
card numbers were all declined and no actual transactions took place.
When he attempted to contact the company to clear up what he thought was
an error, he got nothing but frustration. Customer service workers were
cheerful and attempted to be helpful, but it did not seem to Frankel
that they were empowered to actually do anything to help. "Read your
service agreement" was about the only advice anyone from the company was
willing to give him.
The service agreement includes very broad language in which Cardservice
International disclaims any liability for pretty much anything. That
means, among other things, that they are not prepared to lose their fees
-- even in cases in which no actual transaction takes place that
requires them to do what you are paying them to do.
It seems doubtful that Cardservice International would describe their
fee structure the same way, but our attempts to contact them were
unsuccessful, probably due to the holiday last week. It is interesting
to note that the language in the Frequently Asked Questions about their
merchant account services seems to imply a level of protection for
merchants that is inconsistent with Mr. Frankel's experience.
In answer to an FAQ about how the merchant's money is protected, the
company answers, "Cardservice International is equipped to address the
key protection issues of both traditional and Internet merchants,
including fraud, loss prevention and chargebacks." The web site copy
goes on to say that they use state of the art security technology, but
they don't mention the fact that they wholly disclaim liability if that
security technology is breached.
It is interesting to note that Cardservice International makes something
of an issue in their web site marketing language to urge potential
customers to use their service in conjunction with a different gateway
service: LinkPoint. It is impossible to say whether Mr. Frankel's case
would have been handled differently if he had been using their approved
gateway service, although with the self-indemnification language in the
service agreement, it seems doubtful. Again, due to the holiday, we were
unable to contact them to ask.
Meanwhile, since he was unable to persuade Cardservice International not
to hold him liable for that $2,600 in transaction fees for transactions
that never took place, he has "taken it to the street." Through a site
with the very descriptive URL of
http://www.rippedoffbycardserviceinternational.org, Frankel tells his
story and invites other small business owners to share similar
experiences with him. His plan seems to be, at least in part, to create
something of a public relations nightmare for Cardservice International
in order to put a stop to a policy he refers to as piracy. He is also
carrying out research, and intends to post merchant service providers
with "more ethical" policies to the web site.
It is also interesting to note that, according to Mr. Frankel,
Cardservice International has already offered him a monetary incentive
to take the site down. While he did not disclose the details of the
offer, he did tell me that it did not come close to compensating him for
the fees the company insists on charging him.
"This incident didn't hurt me to the point that it effected my
lifestyle," says Frankel. "But I had all the security measures that they
recommend in place and, when you're doing all you can, you've done
everything you can. What concerns me is that this kind of thing is
enough to put well-meaning, honest, ethical people out of business."
Copyright © 2002 by The MicroEnterpriseJournal.
All rights reserved.
Hundreds of time-saving, money-generating tips and stories from
AMerica's largest online newspaper - TennTimes-the News.
<p align="center"><a
href="http://westviewnews.virtualave.net/sitemap.html">TennTimes - the
News</a>
|
|
 |
|
