Thursday, October 23, 2008

A Feature, Not A Bug

Too many reports to ignore that maybe Barack Obama's vaunted fundraising operation is steeped in fraud. Specifically, the allegation is that the donate-by-credit card option on the Obama website is intentionally disabled to allow fraudulent donations.

If you've bought anything online you've probably dealt with the AVS, or Address Verification Service, which is a check to be sure that your name matches the card number and your address and zip code match the account information as well. Many vendors also insist on the three-digit CVV code on the back to confirm you have the real card in your hand when you donate.

The Obama website has none of this, which is part of the reason that the Obama Campaign has accepted donations from such well-known figures of history and fiction as Good Will & Doodad Pro, Adolf Hitler, OJ Simpson, Nodda Realperson, John Galt, Henry Reardon (those last two for the Ayn Rand fans in the audience) and the best "asdf". In some cases these fictional donors have given tens of thousands of dollars in small increments.

The reason for small increments is that donations of less than $200 do not have to be reported to the Federal Election Commission with the same stringency as larger donations. You do not need to record a name, address and occupation of the donor. If you wanted to send millions of dollars to a candidate, the easiest way to do it would be to do so in $200 increments. You could pay someone $10 an hour, enter a payment a minute, and funnel $12,000 an hour into a campaign, limited only by the ability of your keyboardist to invent new names. Quite frankly, you could just automate the process with a large enough database of names and fictional addresses and do it 24/7/365. The personal limit to any individual campaign is $2300 in the primaries and $2300 in the general election.

The disabling of the fraud-protection system got me thinking, though. There are three ways this could work out for the Obama Campaign.

One, it allows foreign donors to contribute, and it's not as if the man is unpopular overseas. Nice that they have an opinion but taking their money is a federal crime, I believe. The fact that so many Obama donations during the primaries were odd-denomination donations (dollars and cents) makes one suspicious that the donated amounts were in Euros or other currency helpfully converted to dollars by the magic of Visa.

Two, it allows people to use lists of valid credit-card numbers to "donate" to Obama in a fraudulent fashion -- which has happened.

Three, if the Obama campaign was working in conjunction with a fraudulent front company to do its credit card processing, fraud becomes a feature and not a bug.

Usually, if your credit card is misused by someone else your bank will reimburse you for the loss, and attempt to ding the merchant for the difference. If there was an intermediary organization that could a) do the credit card billing for Obama and b) had access to foreign cash (or just cash in general over and above what could be legally donated), the front company could reimburse "fraudulent" charges to people whose cards were used wrongly...and never attempt to get the money back from the Obama Campaign.

Let's say Ima Republican shows up with a $2300 charge on her credit card to "Obama Campaign Services". She reports it as a fraudulent charge, and Obama Campaign Services refunds her the money. Well, if OCS is a front bank with its own source of money, then it doesn't have to go after the Obama Campaign itself to make good. It just accepts the loss and moves on. The Obama Campaign is never asked by Obama Campaign Services, its credit-card processor, to repay the money. Assuming OCS has sacks of cash available, the more fraud the better it is for the Obama Campaign, as long as it doesn't get caught too often. OCS is there to take the hits, pushing otherwise-illegal money to the Obama campaign no matter if it's fraudulent or not.

Sounds a little paranoid, I know. But when I hear about Democratic lawmakers circling my 401k like sharks, paranoia becomes a reasonable way to do business. I know next-to-nothing about credit card processing, this is entirely conjecture on my part. But the fraudulent activity is not conjecture. it's something to be concerned about, especially when it would be very easy to make your website fraud-resistant the way the Hillary Clinton and John McCain websites are.

But Sarah Palin has new clothes, so I guess all of this doesn't matter.

UPDATE: Apparently Chase Paymentech is the company that does the CC processing, and they are a reputable firm. Other people have pointed out that the Obama campaign may batch-process a days' worth of credit card payments and automatically drop obviously fraudulent or illegal contributions -- except "Good Will" has made actual donations.

All I can say is that when you're running for President and trying to raise money through credit cards it's occasionally good to have "The Senator from MBNA" for your wingman. Is Joe Biden worth it? If you're in good with the CC companies he's worth (literally) millions.

1 comment:

Agent Orange Peel said...

I have theory that people from all over the world illegally helped to finance Obama's campaign through his donate-by-credit card option. Mind you it is only a theory and like all theories, it could be wrong