MasterCard Statement about Paycom's Lawsuit
 

From Cardline News?.
PAYCOM SUES MASTERCARD OVER CHARGEBACK FINES: Paycom Billing Services Inc., a Marina Del Rey, CA-based company that primarily processes card transactions for adult Web sites, has filed an antitrust lawsuit against MasterCard International in the U.S. District Court for the Central District of California in Los Angeles. Paycom is alleging that MasterCard has established monopolistic rules that allow it unreasonable discretion to dominate Internet merchants, Dennis M.P. Ehling, Paycom's attorney, tells CardLine today. Ehling says MasterCard either has collected or has attempted to collect more than $2.5 million in fines from Paycom for excessive chargebacks that have occurred since June 2001. MasterCard imposes the fines when chargebacks exceed a 1% of ongoing sales threshold. Ehling says that some months Paycom's chargebacks were below the threshold, and some months they were above it. About 40% of the cards Paycom processes are MasterCards. MasterCard called the allegations "baseless."
"It is nothing more than a brazen attempt to avoid complying with MasterCard rules that are designed to protect consumers, merchants and MasterCard's member financial institutions," MasterCard said in a statement.


End News Story



Start Paycom / EPOCH Response

Someone at MasterCard must have gotten up to the ?B??s today in the dictionary. ?Baseless? and ?Brazen?. Good words, not applicable here. Their statement is a testament to their arrogance.

A further note: Regardless of the author?s writing, Paycom (and our attorney knows this and the lawsuits states) has not been over 1% for since last May (12 months).

OK, now I am seriously worried. MasterCard is making public statements without checking Webster?s. Shameless.


bra·zen ( P ) Pronunciation Key (brzn)
adj.
Marked by flagrant and insolent audacity.

base·less ( P ) Pronunciation Key (bsls)
adj.
Having no basis or foundation in fact; unfounded.

MasterCard called the allegations "baseless."


End of Story


LOL

what about protecting the sites using mastercard against fraud? they don't seem to care about that because they simply charge them money for every chargeback.

It seems like 1/10 posts is something concerning CC processing going to hell :(

Good stuff! :thumbsup

Want me to hand them a rope?

Like always lawyers talk consists of words that normal people have to lookup to make the statement look important.

I bet you 1% of the outcome that it will be a nice settlement :Graucho

exactly!

this is what pisses me off most...
I understand protecting customers and have no problems with that, but I think they need to run that protection both ways. It'll probably never happen, but we can all dream.....

i think this lawsuit will change things. mastercard and visa pretty much have a monopoly and they can charge whatever they want. i don't see how mastercard could win.

They will never protect the merchant because they can charge the merchant up the ass and merchant can do nothing but smile .

they already lost once so far this year. or settled out of court, but they were going to lose anyways.

Who knows maybe some of the large main stream High Risk companies will get in on this. Sure would look good, at least on paper or in the paper.

I dunno how 'baseless' it is when you penalize your clients (the merchants) for issuing refunds or credits to their customers when they aren't happy with the product or service they purchased.

Interesting... This is MasterCard's statement on the Wal-Mart lawsuit... 6 months before they paid Wal-Mart $1 BILLION.

I feel good :)

December 13th, 2002

Noah Hanft, MasterCard general counsel, said: "The retailers' groundless claims are based on the notion that MasterCard has somehow stunted the development of online debit utilizing a PIN number in the U.S. The absurdity of that argument is self-evident when one simply considers the undisputed fact that PIN debit - including STAR, NYCE, PULSE and other PIN debit networks - has grown enormously over the last decade:

No MasterCard rule stops Wal-Mart from suggesting - as it routinely does - that customers pay with PIN debit. Given these undisputed facts, Wal-Mart and other retailers have no basis to claim that MasterCard has somehow impaired their ability to accept or promote their preferred forms of payment. But in the end, it is the American consumer that should ultimately decide how to pay, not Wal-Mart or any other retailer. For this reason as well, this case is simply without merit and should be dismissed now."
American antitrust laws, which are designed to protect consumers, encourage practices like MasterCard's Honor All Cards rule, which creates a greater range of choice for consumers and protects their freedom of choice. For these reasons, this groundless lawsuit should be dismissed."
:glugglug

only 1 billion.. shit

Good luck to you Paycom. You have balls. Hope you don't end up like Website Billing. Didn't they take on Visa. Doesn't seem like things have worked out for them. :(

How much for Paycom? I want an excuse to move to Marina del Ray. I'll pay in Dollars.

Deja Vu. Both lawsuits are very similiar.

Chris is fighting for all of us and the fact that MC even responded pubically shows that they are very concerned about it. If it truly was baseless, they wouldn't even start their PR campaign.

I would agree! I hate seeing the adult industry trampled by the Man simply because we sell naked lady pictures.

another article on the story:

MasterCard sued over Net billing methods
By Dawn Kawamoto
Staff Writer, CNET News.com
May 13, 2003, 4:51 PM PT
http://news.com.com/2100-1019-1001393.html

Internet payment firm Paycom Billing Services has filed a lawsuit against MasterCard, alleging the credit card issuer committed fraud when processing merchants' online transactions.
Paycom, which filed its suit in U.S. District Court in Los Angeles on Monday, said MasterCard used its "monopolistic...power to illegally impose fines and penalties in the millions of dollars" when processing merchants' online sales. Paycom is seeking more than $23 million in damages.

Paycom's lawsuit comes on the heels of a $1 billion settlement MasterCard reached earlier this month with Wal-Mart and Sears, Roebuck over allegations the credit card giant added excessive fees to debit card transactions.

"We understand we're not a brick-and-mortar merchant, and we understand online payments are a different type of transaction than one in person," said Chris Mallick, Paycom's chief executive. "But what we don't understand is the charge backs to Paycom."

In the lawsuit, Paycom said MasterCard charges Internet merchants transaction fees much higher than those charged to traditional retailers, where customers pay with cash or checks.

"MasterCard attempts to justify this difference by arguing that Internet merchants like Paycom are more prone to fraud, but as the District Court established in USA vs. Visa, this explanation is belied by the fact that Paycom and other Internet merchants...bear virtually all risk of loss from fraudulent transactions," the suit stated.

MasterCard said that the suit is without merit and the company's rules are meant to "protect merchants by requiring that the (customer) promptly pay its merchant for all MasterCard transactions and by affording certain protections against bogus cardholder complaints."

Meanwhile, Paycom has received inquiries from more than 24 online merchants and attorneys about filing their own lawsuits or joining Paycom for a class-action suit.

I dont think that WSB's issues have arisen over the fact that they filed suit against Visa -- I seem to recall that being settled and things going back to normal. I would guess their problems stem more from not screening their larger clients more carefully before allowing them to do a few things that were probably bad business ideas.

Remember us little guys when you get that cool billlion. :)

Will that come out of the 40% that the lawyer gets?

Meanwhile somewhere in GFYam city....

Hmmmm I wonder if they are here... lurking....

Quick! Lensman!... to the logmobile!

Hi Chris

Can you tell us any more about this - I have a very close relationship with several billing companies, and they all believe it is definately in the industrys best interest.

Have any other billing companies approached you about a class action ?

Steve

Good job guys. :thumbsup

haha LOL :1orglaugh

Chris gets a billion dollars he will be having his retirement party at Internext lol.

You can email me at [email protected] and I will put you in contact with our lawyers.

Thanks Lens.....
See you in LALA Land in a couple for the D$ Show Live.

C

i am truly impressed! we talked, internally here, a while ago about trying to get webmasters together for a class action suit again visa, mc and amex at the time (discover is the only company who we never had problems with) and much to our surprise, quite a few webmasters weren't interested in signing a petition to file a suit. it floored me how so many webmasters at the time, would just go with the flow of how these companies changed their rules and regulations on the fly without a care for the merchant who they were guaranteed to make money from every month, whether the customer actually paid or not.

kudos to you and give it to them where it hurts!

Another reason why I'm happy Epoch is my primary processor.

I've had merchant accounts and CC processing since 1990 in several different businesses. Visa/MC don't give a rats ass about the merchants or the consumers. They only care about collecting fees. Since they want the customers to keep using the cards so they can keep collecting interest it's in their best interest to screw over the merchants.

Chris - you know this is typical big business B.S. When in doubt deny, deny, deny and then deny again and hope people start believing the BS. Good example ENRON - oh yeah nothing wrong here. AOL anti trust suit, oh yeah we never cooked the books, well maybe a little.

You have them and we all support the fight for the truth. Kick em and then kick em again so they remember.

. .