Massive wire fraud by Obama's campaign?

I sent this to the Washington Post and the NY Times today in response to a story in the Post about the Obama campaign's collection of monies from credit cards. It appears the Obama campaign is breaking laws left and right on this.

The Washington Post story, "Obama Accepting Untraceable Donations," is found at:

http://www.washingtonpost.com/wp-dyn/content/article/2008/10/28/AR2008102803413_pf.html

Pass this on to your friends, email lists, and blogs. The address for this article is:

http://kennethelamb.blogspot.com/2008/10/credit-card-fraud-another-obama-lie.html

To get all that appears in Reading Between the Lines, go to the home page at:

http://kennethelamb.blogspot.com/

Link! Link! Link!


Kenneth
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Here is the email:


In your story today, it was stated by the Obama campaign that there is no way to verify a person's name using a credit card. The quote from the story is:

"When asked whether the campaign takes steps to verify whether a donor's name matches the name on the credit card used to make a payment, Obama's campaign replied in an e-mail: "Name-matching is not a standard check conducted or made available in the credit card processing industry. We believe Visa and MasterCard do not even have the ability to do this."

That is not true.

To verify a credit card holders name, the merchant (in this case the campaign) uses a collections web site page to punch in the credit card number, and then a code that the merchant does not have the card in-hand. The credit card terminal then asks for:

1) The digits of the person's address (I live at 3625 De Loach St., so the merchant punches in "3625"). The web page collects that as part of the donation process.

2) The digits of the person's zip code. Again, the web page collects this.

3) The 3-digit CCI code (4 for AmEx) on the back of the card. Broken record: The web page collects this to correlate the credit card account number with the CCI code, thus validating it is the correct account number.

4) The invoice number; in this case a contribution tracking number. The web page generates this when the donor hits the submit button.

5) The amount of the purchase; in this case, the amount of the contribution. The donor fills in the amount on the web page.

If everything does not match up, the credit card is rejected.

In the case you cited of Ms. Biskup, had the Obama campaign set-up their credit card processing to honestly confirm the giver is who he or she says he or she is, they would have set up their donation page to collect all that information - just as hundreds of thousands of other web merchants do every day.

The credit card processing computer would have thrown out all the donations placed in Ms. Biskup's name because the fraudulent credit card holder would lack, at the least, the CCI code, and unless there was a sophisticated identity theft, the fraudulent donor would also lack the home address digits and the zip code.

Even if the fraudulent donor had the address information, and the zip code, and the CCI, the Obama processors would have stopped taking donations when the legal limit was reached because it has to be attributed to a specific name and address, and in the example you gave in the story, the name would have come up in the Obama database as over the limit.

In the case of pre-paid credit cards, the name prohibition remains in place. It is nothing for today's financial databases to cross-reference a name and a donation. When the legal limit was reached, the database would reject any further donations from that name.

The truth is that there are safeguards in place to avoid credit card fraud, and these are meant to protect consumers from fraudulent merchants who attribute false sales to them, as much as protect merchants from fraudulent consumers. What the Obama campaign told you is not true.

I own a computer manufacturing company, and have database experts who can comment on the story. I also can put you in touch with Merchant Services for Visa and MasterCard who can discuss the security arrangements in place to handle these issues. I am available to talk with you about this.

Kenneth E. Lamb


Another thought I had while re-reading the post is this:

Each of the credit card transactions that had a fraudulent name, or address, or whatever else that was fraudulent, has to go back to the bank in the form of "charge-backs." If it's not an honest representation of who made the donation, it is by definition fraudulent.

A charge-back is when the bank goes into your account, and "charges back" to itself the amount of money that would not have been placed into the account if the bank knew about the fraudulent representations at the time the campaign made a "claim" for the credit card deposit.

What complicates this for the Obama campaign is this: a deposit from the credit cards by the bank to your account is really a form of a loan - you get the money, but it's yours to use so long as nothing comes up later to cause the charge-back to kick into effect. It's in the service agreement with the credit card processing agent.

In this case, we have massive - and I feel doubtless - criminal credit card fraud. The Obama campaign took money it had the ability to know it had no legal right to accept. Now watch how this turns into a form of bank fraud called wire fraud. (In this case "wire" fraud because it is fraud using communications lines to commit the fraud.)

Take the $275,000 that the Post story said is attributed to Ms. Biskup on Obama's campaign donations report. Leaving aside the obvious question of how that number got by the campaign's finance operation, it is reasonable for the banks to now charge-back against the campaign the money it "lent" to the campaign in the form of credit card deposits. The name attributed to the transaction is fraudulent, making the transaction itself fraudulent.


Put another way, if the campaign could not identify the card owner - which I've shown is not true - then the campaign should have declined the transaction. It is the merchant's obligation to verify who is making the charge. That is the reason for capturing all the information I outlined earlier. Instead, it processed the transactions with a reckless disregard for the truth.

The inability of the campaign to repay those charge-backs constitutes a form of borrowing - fraudulently - by the campaign. It took a loan from the bank it has no way to repay. It defrauded the bank out of its money.

On top of that, the potential charge-backs represent an interest-free loan. The Obama campaign couldn't help but know that if caught, it would have to repay the charge-backs, but in the time between the deposits into the campaign account, and the repayment to the bank, the campaign is getting an interest-free loan. Is that legal?

I doubt it.

But more important than anything else is what it says about the integrity of the Obama campaign and Obama himself. These people are criminals, plain and simple.

Add a few thousand charges of wire fraud to the list of Obama's "changes" for America.
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