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Friday, October 24, 2008

Does Obama's Website Facilitate Fraud? (Updated)

A comparison of the Obama and McCain websites: only one allows fraudulent donations.

UPDATE: In response to the Obama campaigns claim that they check for fraud afterwards and returns fraudulent donations, Mark Steyn believes that allowing that kind of fraud had to be deliberate:
in order to accept donations from "Della Ware" and "Saddam Hussein" et al, the Obama website had, intentionally, to disable all the default security settings on their credit-card processing. I took a look at the inner sanctum of my (alas, far more modest) online retail operation this afternoon and, in order to permit fraud as easy as that which the Obama campaign is facilitating, you have to uncheck every single box on the AVS system, each one of which makes it very explicit just what you're doing - ie, accepting transactions with no "billing address", no "street address" match, no "zip code" match, with a bank "of non-US origin" (I've got nothing against those, but a US campaign fundraiser surely should be wary), etc. When you've disabled the whole lot one step at a time, then you've got a system tailor-made for fake names and bogus addresses.
Is this a habit? CNN reports that the Obama campaign is tied to ACORN, which is under fire for voter registration fraud in a number of states.

In another post, Steyn quotes someone from a credit card processing company:
So let's lay out a hypothetical situation. You're in a business that takes payments. You expect some level of outright credit card fraud. Those transactions will be charged back, and you will owe fees on them, unless you use AVS [Address Verification Service] to prevent them. You also have a substantial number of customers who for whatever reason wish to remain anonymous. Your anonymous customers won't do business with you if you use AVS, but you're confident that this set of customers will not dispute their charges. The calculus is simple. If the revenues you expect from anonymous customers exceeds the fees you expect to pay from cardholder disputes leading to chargebacks, then the smart business decision is to turn off AVS.

Now if it's against the law for customers to do business with you anonymously, then facilitating anonymous transactions goes beyond just being a business decision. But if the consequences of looking the other way are no more than having to refund the money several months down the road, then maybe you're happy to take the money as an interest free loan in the meantime.
Win-win?

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