More 12DailyPro Bashing by Stormpay

Stormpay released another announcement on their website. Read it, and draw your own conclusions.

February 11, 2006 Update to StormPay Customers.
11-Feb-2006 17:12
February 11, 2006

StormPay Inc. is currently suffering from DDOS (Distributed Denial of Service) attacks which prevent StormPay from sending or receiving email communications as well as prevents customers from being able to access their StormPay account’s through the StormPay.com website. These DDOS attacks in no way compromise the security of your StormPay account as they are only designed to prevent legitimate traffic access. Federal authorities are investigating the origination of the attacks and have confirmed that they are very close to making arrests in connection with the DDOS attacks.

We are sure that many of you are aware of the recent controversy with Charis F. Johnson and other “Auto-Surf websites”. The funds of those merchant’s and specifically Charis F. Johnson have been locked in their StormPay accounts as investigations are ongoing into what appears to be massive illegal Ponzi schemes. Any payments you may have received from these “Auto-Surf’s, that were still within the StormPay system have been restored back to the accounts’ of those ‘Auto-Surf’s where the funds are protected and preserved in an effort to try and refund customers who may have been victims of these programs. We can confirm that there will not be enough money available to get everybody reimbursed but we are formulating an orderly plan to reimburse victims to the limited extent that may be possible.

The problem we are seeing is that customers are viewing their "earnings" from the “Auto-Surfing” websites’ and believe that StormPay Inc. is holding funds sufficient to cover those "earnings". StormPay is not holding funds sufficient to cover the alleged "earnings" or "payments" or "payouts" that are reflected on the Auto-Surf’s website (we suspect we are holding only a small fraction of what is being reflected as "owed" to customers on the websites). Some customers that received a "payout" from these “Auto-Surf’s received that at the expense of somebody else who contributed to the program but who may have never received any "payout". Consequently, the reason that we have restored funds back to the accounts of these so called “Auto-Surfs” that represent payments that some members received was so that we can attempt to reimburse as many people as possible. In the usual Ponzi scheme, if you received a payment from the program it had to have come from the payments that another member made to the program. Therefore, if you have received a payment, you received someone else's money. That is the problem with a Ponzi scheme, once it collapses a lot of people get hurt. There is no way to make everybody “whole” and most people will lose money as there simply won't be available funds to make everybody “whole.” The reason that is, once people withdraw their “payouts” or “earnings” out of StormPay, that represents other peoples money, and if the only money coming in is from new “investors” (and not any other source), there is no “new” money available to make payouts or even refunds to some members.

Assume you have a customer (customer #1) who funds their StormPay account with $1000 and sends that money to one of these “Auto-Surf’s”. Then customer #2 follows up by funding their StormPay account and thereafter sends $1200 to the same “Auto-Surf”. Thereafter, the “Auto-Surf” sends $1200 to customer #1 for their percentage of promised “return” on their original “payment" and thereafter, the program shuts down as it did in these cases. In a Pyramid type operation/program/scheme there is no longer any new money coming into the program to pay back customer #2. Customer #2’s payment was what was used to pay customer #1. If this is not a Pyramid operation there should be money to refund customer #2 but there is not in this case. StormPay Inc. cannot allow customer #1 withdraw the money in his StormPay account (which was received from the “Auto-Surf”) into his own personal bank account, since it is really the money belonging to customer #2. The only solution is to reverse as many of the funds as possible so that many more victims of the ponzi/pyramid schemes can be reimbursed their original “investment”. Keep in mind that many of the first people into the schemes have already withdrawn the funds rightfully belonging to the later participants. Despite our best efforts to correct the seemingly wrong doing of these “Auto-Surfs”, there simply will not be enough remaining monies to make everyone “whole”. Again, this is due to those admins and other participants of the programs’ who have withdrawn monies rightfully belonging to others. StormPay Inc. is currently undergoing an audit, near completion, and done with our absolute and complete cooperation, which will show that every penny of money we have ever had control of can and has been accounted for.

StormPay does not permit the processing of payments for any illegal program and our Terms of Service expressly prohibit the processing of any payments for any illegal Ponzi or Pyramid scheme. Our Terms of Service do expressly provide:

“17. Get Rich Quick" Schemes: Get Rich Quick Schemes are prohibited resell items by StormPay. Get Rich Quick schemes include any type of self-employment, start-up businesses, or investment opportunity where the claims of profit or returns on investment are unrealistic or unsupported. By law, if a business opportunity costs $500.00 USD or more, the promoter is required to support any claims regarding earnings or profits with written documentation.

Pyramids don't pay. StormPay Inc. and the Federal Trade Commission caution consumers about clubs or programs that promise quick money for recruiting new members. Don't bank on the pyramid promise that someone else will pay you. For more information on get-rich-quick schemes, visit the FTC at www.ftc.gov.”


There are claims afloat that StormPay Inc. has performed unauthorized charges from customers’ bank accounts or credit cards. StormPay can, and will prove to any and all investigators that all charges made were made from each individual’s own computer, or a computer from which the customer has accessed, and was an authorized charge by that customer. StormPay Inc. intends to investigate each and every assertion wherein it has been claimed that StormPay Inc. initiated and unauthorized bank or credit card debit, and will prosecute those persons, and seek recovery of, all funds wrongfully charged back, including all costs involved to do so.

StormPay Inc. would like to take this opportunity thank it's customers for their continued support - past, present, and future. We very much look forward to the time in which all investigations have been completed and the truth is revealed to the public and our valued customers. We anticipate having access to our website in the coming hours and resuming normal business operations.

Sincerely,

StormPay Inc.
1690 Golf Club Ln.
Clarksville, TN 37043

What bugs me is the way Stormpay twists the facts. 12DailyPro has been using Stormpay for months now. Why is it only now that Stormpay brings up Section 17 (concerning Get-Rich-Schemes) of their TOS? Shouldn't this have been an issue when 12DailyPro first started using Stormpay? Isn't it because of all the transaction fees that 12DailyPro has generated, that Stormpay chose to remain silent? Don't bite the hand that feeds? It cannot be denied that 12DailyPro generated huge amounts of traffic and money into Stormpay's coffers.


In addition, Stormpay continues to use the media to spew propaganda and garner support for the current chargebacks done on suspended autosurf members.

Article published Feb 11, 2006
Auditors dig into frozen StormPay accounts
FBI asks BBB for records from probe into online payment processor
By MARK HICKS
The Leaf-Chronicle

Auditors were busy at StormPay.com Friday as investigators try to get to the bottom of a dispute between the Clarksville online pay processor and a client who operates an "autosurf" Web site.

"We are excited about the audit," said Steve Girsky, StormPay owner and CEO. "We have no problem with them coming in to do the audit."

Additionally, Better Business Bureau of Middle Tennessee president and CEO Kathleen Calligan said Friday the FBI has requested it receive all records the agency gathers from the BBB's investigation of complaints about StormPay and associated businesses.

Calligan said the BBB plans to issue a statement early next week after more investigation.

On Wednesday, officials with the Consumer Affairs division of the state Department of Commerce and Insurance said an investigation of StormPay was being conducted.

"We are doing everything that we can to process the complaints to the consumers to let them know that it is with the Consumer Protection Enforcement staff, and that we will let them know when the investigation is complete," Mary Clement, director of Consumer Affairs, said in a Friday e-mail.

Girsky and StormPay President John McConnell said, during an interview at their Golf Club Lane office, they were instructed not to disclose which regulatory agency conducted Friday's audit. The two say the examination will show their company has committed no wrongdoing and will "shed a positive light on StormPay."

On Feb. 1, StormPay officials froze accounts of some 30,000 to 35,000 12DailyPro.com members after receiving several complaints from members that money they earned from 12DailyPro was not being sent to them.

12DailyPro, based in Charlotte, N.C., operates a Web site that offers a 12 percent daily return on membership fees for viewing a dozen advertisements a day on Web sites. The pay is based on how much is invested in subsequent membership "upgrades."

StormPay is the intermediary that sends and receives electronic payments from 12DailyPro, as well as a number of other Internet businesses and users. McConnell said 12DailyPro member accounts comprise about 2 to 3 percent of StormPay's total customer base.

McConnell said their records indicate the last payments from 12DailyPro operator Charis Johnson to members was Jan. 8. When complaints of nonpayment came to StormPay later in January, company officials began to suspect something was wrong after Johnson was unable to answer questions about her business.

"She said it was proprietary information," McConnell said.

Steven Carr, an attorney with Nelson Mullins Riley and Scarborough law firm in North Carolina, said Friday he and another lawyer had advised Johnson to "decline all requests for interviews because the investigation was going on."

Carr, who said he was retained to negotiate with StormPay to release money it froze in 12DailyPro accounts, confirmed that he had been contacted by the federal Securities and Exchange Commission regarding 12DailyPro. He declined to elaborate further.

Carr, on behalf of 12DailyPro, released a statement Thursday evening stating StormPay officials were refusing to communicate or negotiate with 12DailyPro lawyers and they were "evaluating our legal options."

McConnell said he had talked with Carr Wednesday. Carr confirmed, saying it was a brief conversation about a fax number and "nothing substantive was discussed."

"I would like to communicate with the folks at StormPay and resolve this on an amicable basis, but I haven't heard back from them," Carr said.

McConnell said StormPay froze the accounts and is holding the money until investigations are completed to help ensure 12DailyPro members receive as much of their investment as possible.

Ponzi or autosurf

Calligan characterized 12DailyPro as a Ponzi or Pyramid scheme. Charles Ponzi in the early 20th century devised a scheme that promises huge returns to investors but pays them with money from subsequent investors, rather than revenue generated by the business.

While some legitimate autosurf sites generate money from companies that pay for Internet advertising, Calligan said 12DailyPro's only revenue is from members who "upgrade" their membership and bring in more members.

"What are you selling? It's not a product or a service ... without it, you've got a pyramid going on," she said of 12DailyPro.

Calligan said she and her entire staff of eight are now focused on investigating the more than 19,000 complaints against StormPay. "We are committed to answering each one," she said.

With the BBB investigation focusing on StormPay, Calligan said they "want to make sure that's all they're doing."

Source: The Leaf Chronicle

Please refer to revenues.blogspot.com for more News Updates


Thankfully, the authorities appear to be doing SOME proper investigation into the matter. The major concern plaguing Stormpay users, is that Stormpay takes the money and run. With the authorities watching their every move, this is probably less likely. However, it can be a real problem for many to have such large amounts of cash frozen in their Stormpay accounts.

In the above article, Stormpay claims that 12DailyPro members account for barely 3% of their customer base. Is that based on total transaction worth or total accounts in Stormpay's system? It appears that Stormpay is trying to make 12DailyPro (and other autosurfs) appear to be expendable business clients, by playing down the amount of fees generated by Stormpay from these transactions. Clearly, they don't consider the amount of fees generated by NetIBA (most of these autosurf members would have obviously got NetIBA certification for the lower fees).

What is not reported, is the fact that some people (claim they) are getting up to 3-4 chargebacks; e.g. just say someone invests $600 into 12DP, and gets $864, reinvest $600 of that, and gets another $864. The chargeback total would be $1728, when the actual money in the account is $1128. For 4 transactions, that's $3456 chargeback and $1656 actual money in system, of which $1056 is the actual 'profit'. (Notice: I have excluded transaction fees for ease of calculation).

The reluctance of Stormpay to discuss issues with 12DailyPro's legal team appears to be pure posturing, in order to gain a psychological advantage in the inevitable legal battle. By repeating the mantra of 'ponzi, pyramid, get-rich-quick, unsustainable, evil', Stormpay has already plunged the knife into the autosurf industry, and twisted it hard.

Now, for the autosurfs that do appear to provide a sustainable % ROI (% comparable to some long term HYIPs), the last few weeks have been a real setback. Irrespective of whether they are ponzis or not, many autosurfs that conducted their business using Stormpay will not recover from this fiasco.


Related links:
XtreamNet Marketing Blog: Stormpay - payment processor gone bad
Better Business Bureau of MiddleN Tennessee, Inc
BuildCash: Urgent - Stormpay Lying Again - Stop Them!
NetMoreProfit - What is Stormpay up to?
HYIPDaily - More Updates from 12DailyPro