07/13/2003 - Paycom / EPOCH Sues MasterCard

From the desk of Chris Mallick, CEO - Epoch / Paycom:
Today Paycom / EPOCH sued MasterCard International in Federal Court in Los Angeles. Our suit alleges Anti Trust violations, Fraud and Unfair Trade Practices by MasterCard against Paycom / EPOCH and Internet merchants in the so-called "high-
risk" space. The lawsuit may be found at: www.paycom.net/MasterCard/lawsuit.pdf. We suggest reading the entire lawsuit if you have time. If not, pages 21 - 44 tell the story of why we are suing.

We will continue to accept MasterCard during and after this lawsuit.

Paycom / EPOCH made a decision that the only way to ensure the long term ability of our business, that of our clients and that of the other high risk internet merchants to accept MasterCard was to file this lawsuit. We tried everything to avoid this, but
MasterCard has simply become too unreasonable to deal with in our marketplace.

There is no simple way to explain this lawsuit. However, in an effort to give you the basics, here are the main issues:

MasterCard has set the chargeback ratio for high-risk Internet merchants at 1%. MasterCard has also said that when a Merchant's credits exceed its chargebacks, it will count credits as chargebacks. However, credits almost always exceed
chargebacks, so MasterCard has in effect made a rule that the combined chargeback and credit ratio must be below 1%. If Paycom / EPOCH (or any high risk Internet merchant) goes over the 1% threshold for 2 consecutive months, then
MasterCard can impose fines of up to $100 per chargeback and credit plus $100K per month. It has also said that it has the right to continue to impose these fines for at least 12 months even if we are under the 1% ratio during those months.

You can see why this is an impossible situation when you consider, for example, that because of MasterCard's "Zero Liability" policy, we must issue a credit whenever a card holder claims that he or she did not authorize a charge.
MasterCard is now penalizing us for following its rules by issuing credits. But, if we refuse to issue credits, MasterCard will punish us anyway since those cardholders will charge back. It is simply an unacceptable situation.

To make this issue even more onerous, MasterCard counts known stolen cards against us in calculating the ratios. For example: DPI was hacked and hackers got 13 million card numbers (about 5 million or so were MasterCards). MasterCard knows which cards were compromised, but has not cancelled those cards nor will it give us a list of the compromised accounts numbers so we can block them in our system. The result is that criminals can buy the card numbers from the hackers, sign up as resellers, run the cards through our system; and MasterCard places the full liability for that fraud on our clients' and our shoulders.

Paycom / EPOCH was also fined late last week approximately $1.5 million for being in the "Excessive Chargeback Program." However, a fine should not have been imposed. MasterCard did not have right to fine us under its rules, and it will not even give us the courtesy of an explanation as to why it imposed the fine. We are not passing those fines to our clients at this time, even though we have the right to do so. Instead we are standing up for the industry and fighting for our collective rights in this litigation.

MasterCard is a monopoly, as a United States Federal District Court has already determined. As such, a monopoly like MasterCard has a duty and an obligation to treat us fairly as a class of merchants. We are going to try and make sure it lives up to that duty. Wal-Mart did. Home Depot will. We know we are not Wal-Mart or Home Depot, but we are entitled to insist on fair treatment just like they are.

We expect a great number of questions so we are staying late tonight to answer as many as we can. The lawsuit speaks for itself, but we know you will want and that you deserve direct answers. Paycom / EPOCH clients are encouraged to email questions as well, indicating your Master Code in the Subject line.

Please email any processing questions to rand@paycom.net. Rest assured, processing will not be interrupted and payments will not be affected.

---Rand at EPOCH
Director of Corporate Communications
rand@epochsystems.com

06/13/2003 - MasterCard Sued for Antitrust Violations & Fraud

MARINA DEL REY, CA. Paycom Billing Services, Inc., an Internet Payment Service Provider, processing credit card and check transactions for Internet merchants, filed a multi-million dollar lawsuit today in Federal Court in Los Angeles against MasterCard International for antitrust violations, fraud and other issues.

Paycom's suit alleges that MasterCard has established monopolistic rules that allow it unreasonable discretion to dominate Internet merchants, and it has exercised this power to illegally impose fines and penalties in the millions of dollars.

Former Federal Prosecutors for the US Department of Justice, William McD. Miller and Richard P. Crane, Jr. of the Los Angeles law firm Musick, Peeler & Garrett LLP and Dennis M. P. Ehling, filed the lawsuit on behalf of the Plaintiff. Mr. Crane stated, "A United States Federal District Court has already determined that MasterCard is a monopoly. MasterCard's continued unfair dealings and the imposition of baseless fines, penalties and fees on Internet merchants, such as Paycom, simply prove the abusive control that one finds in a monopoly."

Paycom's Chief Executive Officer, Christopher Mallick, commented "We are in compliance with MasterCard's rules as a merchant, yet they fine us millions of dollars. Paycom has been directed to change its entire business structure, indeed to change the way in which E-commerce works, to comply with additional rules from MasterCard; rules that MasterCard cannot or will not articulate or explain." Mallick added, "These rules are unreasonable and demonstrate MasterCard's intent to continue to economically bully Internet merchants. Paycom has a responsibility to our employees and our clients. The intent of this lawsuit is to force MasterCard to treat us and other Internet merchants fairly and to permit us to operate as any other merchant class. This is a business that we built on our ability to accept MasterCard, one of the only currencies available for online shoppers."

The litigation alleges MasterCard violated several Federal and California State laws including violations of Federal and California State anti-trust laws, denial of fair procedures, unfair competition, fraud, breach of contract and breach of implied covenants of good faith and fair dealing, intentional interference with Paycom's contractual relationships, and intentional and negligent interference with Paycom's prospective business advantage, and seeks damages, declaratory and injunctive relief.

Paycom's lawsuit may be found at www.paycom.net/mastercard/lawsuit.pdf
All inquiries should be directed to:
Dennis M. P. Ehling, Esq.
Musick, Peeler & Garrett, LLP
Telephone: 213-629-7600 or by email: d.ehling@mpglaw.com

01/06/2003 - Epoch Launches New Billing System - EPassporte

Over the past several months, Epoch has been working toward the launch of a new product that will change the way business is done on the Internet. Today, we are very excited to announce the launch of epassporte.

What is it?
It is a Visa card. It is a PLUS ATM Card. It is the answer to billing for previously blocked transactions. Epassporte has an unlimited number of potential applications. One of which is a solution for processing high-risk and previously blocked transactions that might not otherwise be accepted due to scrubbing. It is also an anonymous way for people to buy adult entertainment online, without the charges appearing on their regular credit card statement. Epassporte also includes peer-to-peer payment functionality, which has virtually limitless applications.

How Does It Work?
Epassporte is a Visa debit card. It functions just like any other Visa card for online transactions and can be obtained in real-time in virtually seconds from epassporte's homepage. Seconds? Yes, Visa cards are issued online and in real-time to new epassporte cardholders. The online use of epassporte is accomplished with the epassporte Virtual Visa, meaning the card number, expiration date, and CVV2 number are obtained at the moment that the epassporte account is loaded. The epassporte Virtual Visa may be loaded from any Visa or MasterCard. Once the epassporte account is loaded with stored value, the epassporte Virtual Visa is created instantly, online and ready to use for purchases. And of course Epoch has seamlessly integrated this entire process into its systems.

Why?
Why use epassporte? If you are a surfer and live in a country whose transactions have been blocked, now you can purchase online using a pre-funded debit card from epassporte. Since the surfers' credit card is being charged using a special code to load the Virtual Visa, it is extremely difficult to charge back. Additionally, the epassporte Virtual Visa provides anonymity for the surfer because all online purchases will appear only in the epassporte electronic account statement and never on a mailed card statement.

Webmaster Applications.
Epassporte is much more than a tool for billing. It is also a peer-to-peer payment mechanism. Now you can move funds to any other epassporte account holder around the world at any time with the click of a button. It costs less than the price of a stamp to transfer funds from one account holder to another with no minimum or maximum limits. This means no more wire fees; no more checks to write, stamp and mail; no more Federal Express or UPS charges to send payments to your affiliates; no waiting for the check to arrive; and foreign webmasters will have no further problems with receiving funds in a timely manner and without unnecessary consequences or additional costs.

Show Me The Money!
"Epassporte is a Virtual Visa and I don't do all my shopping online. I want cash!

No problem. The epassporte Visa Electron card is the plastic companion to the Virtual Visa account. It arrives to your address in about 10 days. Use your epassporte VISA Electron card to get cash at ATMs bearing the PLUS and/or VISA logo or to make purchases at PIN-based merchants anywhere Visa is accepted. One account, two numbers. Use epassporte online or around the corner - all over the world.

Pay your affiliates, your hosting provider, your talent, or anyone that you normally send payments to. No other payment method is this easy and convenient.

Worldwide Launch!
Epassporte launches today and you can speak to any epassporte Representative at booth #204 at InterNeXt in Las Vegas. Not attending InterNeXt? We know that Webmasters will have lots of ideas about how this new tool can be used. Let's discuss the possibilities.

Find out more by going to our website at https://www.epassporte.com or writing to info@epassporte.com.

12/24/2002 - Epoch Transaction Services Becomes a Founding Spon

Dec 24, 2002 - Adult Sites Against Child Pornography (ASACP) is pleased to announce Epoch
Transaction Services has joined ASACP as a Founding Sponsor. Founding Sponsors are ASACP's highest level of sponsorship and actively participate as members of their Advisory Council. ASACP is the organization helping the adult site industry to make a difference in the battle against child
pornography.
“Epoch Transaction Services is proud to announce their sponsorship of ASACP. As one the oldest, largest, and most innovative online billing companies, Epoch has always been a supporter of organizations which help in the fight against child pornography and the exploitation of children.
As a billing company, we are in a unique position to help in the fight against the exploitation of children,” says Jeff Southworth, Director of Sales and Marketing at Epoch and member of ASACP's Advisory Council. "We screen sites that we process for continually to insure that they never include content of or about children. It is everyone's responsibility to insure that children are not involved in pornography in any way, including the marketing of sites or the content within them."
Over 2,000 adult sites proudly display the ASACP logo and take a stand against child pornography. If you are interested in learning more about ASACP or helping in the fight against child pornography, please view the ASACP site ( www.asacp.org). If you are interested in supporting our vital mission by becoming a Sponsor, please email joan@asacp.org.