Techdirt. Stories about "visa"

Google Looks To Cut 'Funding' To 'Illegal' Sites It Doesn't Fund In The First Place

Mike Masnick — Tue, 19 Feb 2013 07:19:03 PST

A few folks have pointed us to this odd article at the UK's Telegraph, in which it claims that Google is "in discussions with payment companies" to stop funding to "illegal download websites." There are a bunch of problems with this, with the first one being, huh? It's not clear what Google has to do with any of this. The article claims that Google is talking to Visa, Mastercard and PayPal, but why should that be any of Google's concern in the first place. All three of those payment providers are already quite well known for cutting off payments to sites they don't like, including sites accused of being involved in copyright infringement. So what good would further discussions do?

And, of course, really this sounds exactly like Google's response to SOPA. When quizzed about what should be done, Google supported what was called the "follow the money" approach, which was all about getting companies, like Visa, Mastercard and Paypal, to cut off funding to sites deemed to be "illegal." And, that was a component of SOPA -- which Google had hinted would be acceptable (which is yet another point that disproves the whole "SOPA only died because of Google" narrative, since Google would have been perfectly fine with a bill that was just "follow the money.")

If it's true that Google is looking to partner up with these payment processors under some sort of "voluntary" agreement, that's still confusing (what is Google's role here again?), but also quite troubling. The problem, as always, is how do you define "illegal" or sites "dedicated to copyright infringement." Once again, nearly every important technological breakthrough that later became a central piece to how we distribute, promote, consume and monetize content was initially decried for its "infringing" uses. The radio, cable TV, the VCR, the MP3 player, the DVR, YouTube and much much more were all declared "dedicated to infringing uses" by the industry who sought to make them all illegal. Imagine where YouTube would be if such a rule was in place, and their ability to make any revenue was completely barred by such a "voluntary" agreement? Imagine where the VCR would be if no one could sell them since payment processors would refuse to process them?

If this move goes through, it won't be good for the entertainment companies, though it could be good for Google, since it would effectively lock in players like YouTube, and really limit the ability of anyone else to jump into that market. The bizarre part is, of course, that this would be a result of the entertainment industry really pushing Google to do this sort of thing, even though it clearly works to their disadvantage. The end result would be fewer platforms and less competition in the space, giving the few dominant players today much more leverage.

Even so, such a move would still likely come back to bite Google too, because Google benefits from others pushing the innovation envelope as well, creating new markets and services that are good for Google. Cutting off innovative startups by declaring them "illegal" is likely to kill a bunch of good ideas that would have helped the entertainment industry, while still doing nothing of any significance to actually stop infringement.

Either way, if this report is accurate, like with Google caving to Hollywood's demands over search rankings, it won't satisfy Hollywood (nothing will), it won't stop infringement, but it likely will make consumers worse off by killing off important innovations. That's a shame. Furthermore, it would be yet another example of SOPA happening anyway, despite the protests against the law.

Hopefully the rumors (as confusing as they are) are just rumors and Google execs are smart enough not to bow down to such ridiculous pressure.

Permalink | Comments | Email This Story

Iceland Court Orders Visa To Start Processing Wikileaks Payments Again Within Two Weeks

Leigh Beadon — Thu, 12 Jul 2012 09:10:00 PDT

It's been about a year since Wikileaks filed its complaint against Visa, Mastercard and Paypal for cutting off all payments to the site following the infamous leak of the State Department cables. Wikileaks saw this is a clear attempt to censor the site using an economic workaround, and a violation of their contract—and now at least one court has agreed. Today Wikileaks announced a significant victory in the case against Visa, with the court giving them two weeks to start processing payments again:

In a case against Valitor, formerly VISA Iceland, Reykjavík District Court just ruled the company had violated contract laws by blocking credit card donations to Wikileaks. After WikiLeaks' publications revealing U.S. war crimes and statecraft in 2010, U.S. financial institutions, including VISA, MasterCard, Bank of America, erected a banking blockade against WikiLeaks wholly outside of any judicial or administrative process. The blockade stripped away over 95% of donations from supporters of WikiLeaks, costing the organization in excess of USD 20M.

The court ruled that the donation gateway should be reopened within 14 days otherwise Valitor will be penalized with a fine of 800 000 ISK daily. WikiLeaks is persuing several actions against the blockade and a European Commission preliminary investigation into the blockade was started last July. A Commission decision on whether to pursue the financial services companies involved in the blockade is expected before the end of August.

This is a big win for Wikileaks and a bad sign for the other companies complicit in the payment blockade. Whatever you may think of Wikileaks, cutting off their access to donations at the payment-processing level is a highly questionable shortcut—and hopefully the courts recognize this in the cases against other payment providers.

Permalink | Comments | Email This Story

Paypal Pressured To Play Morality Cop And Forces Smashwords To Censor Authors

Zachary Knight — Mon, 5 Mar 2012 08:21:18 PST

We have become quite accustomed to Paypal arbitrarily deciding to shut down the payment services for a website with no warning and little recourse. Usually when it does so, it acts through its own volition. However, Paypal also has to deal with the whims of the credit card companies with which it is partnered. With that business arrangement, when a credit card company says to jump, Paypal must comply. When it does so, it effects all its own customers as well. Ebook publisher Smashwords reports that it has become one of the latest recipients of one such action. Under pressure from credit card providers, Paypal has put in place a policy that it would no longer process payments for ebooks that contained themes of rape, incest, beastiality and underage sexual content. It then decided to give Smashwords less than a week to remove all books that fit those criteria.

On Saturday, February 18, PayPal’s enforcement division contacted Smashwords with an ultimatum. As with the other ebook retailers affected by this enforcement, PayPal gave us only a few days to achieve compliance otherwise they threatened to deactivate our PayPal services. I've had multiple conversations with PayPal over the last several days to better understand their requirements. Their team has been helpful, forthcoming and supportive of the Smashwords mission. I appreciate their willingness to engage in dialogue. Although they have tried their best to delineate their policies, gray areas remain.

Their hot buttons are bestiality, rape-for-titillation, incest and underage erotica.

This has put tremendous pressure on Smashwords to comply as it claims that it would be near impossible to change payment processors as Paypal is a major part in not only how it processes transactions but also how it pays its authors. So it has made several changes to its terms of service to account for the types of books that Paypal and its credit card partners are not happy about. Keep in mind, this is hard for Smashwords as it feels that authors of erotica are being unfairly targeted by this move.

We do not want to see PayPal clamp down further against erotica. We think our authors should be allowed to publish erotica. Erotica, despite the attacks it faces from moralists, is a category worthy of protection. Erotica allows readers to safely explore aspects of sexuality that they might never want to explore in the real world.

The moralists forget that we humans are all sexual creatures, and the biggest sex organ is the brain. If it were not the case, none of us would be here. Erotica authors are facing discrimination, plain and simple. Topics that are perfectly acceptable in mainstream fiction are verboten in erotica. That’s not fair.

This is an unfortunate set back for Smashwords as well as for indie authors. While the government in the US is not able to censor speech in this manner, there is little preventing a private company like Paypal or its credit card partners from taking these actions. Yet, Smashwords is not giving up hope. In its latest update, Smashwords notes that it had managed to get the deadline extended as well as the definitions of prohibited content relaxed. It also wants to clarify that neither it nor Paypal are the real villians in this issue.

A lot of people have been attacking Smashwords for my decision to comply with PayPal's requirements. They're pointing their arrows at the wrong target, and they're not helping their cause. We're working to effect positive long term change for the entire Smashwords community, and that includes all our erotica authors and readers.

Over the weekend, many Smashwords authors and publishers demanded we abandon PayPal and find a new payment processor. It's not so simple, and it doesn't solve the greater problem hanging over everyone's head. PayPal is trying to implement the requirements of credit card companies, banks and credit unions. This is where it's all originating. These same requirements will eventually rain down upon every other payment processor. PayPal is trying to maintain their relationships with the credit card companies and banks, just as we want to maintain our relationship with PayPal. People who argue PayPal is the evil villain and we should drop them are missing the bigger picture. Should we give up on accepting credit cards forever? The answer is no. This goes beyond PayPal. Imagine the implications if credit card companies start going after the major ebook retailers who sell erotica?

Smashwords then continues by expressing its goal of pulling the credit card companies out into the open to discuss these issues. The behavior of the credit card companies shown here is exactly the type of behavior we advocated against when fighting SOPA/PIPA. Those bills would have given credit card processors the abiltity to kill payment services to companies alledged to be illegal. We warned that such behavior would result in additional harm as legal speech would be swept up along with the potentially illegal speech. Here we see just that. These credit card companies are using their position to censor speech -- some of which may violate obscenity laws, but much of which is likely perfectly legal, protected speech. This is a no win situation for Smashwords. By complying, it must censor the speech of its authors. By not complying, it would lose the ability to serve all its authors.

Finally, Smashwords suggests a plan of action. It wants everyone to work together to put public pressure on the credit card companies in order to get them to change their stance. We saw how effective such efforts were with SOPA/PIPA. We managed to pressure Godaddy and the ESA to drop their support. We can do the same for these credit card companies and their policies that result in censorship.

Permalink | Comments | Email This Story

If At First You Don't Succeed As A Patent Troll, Just Sue Again

Mike Masnick — Wed, 28 Sep 2011 05:44:30 PDT

The excellent new Patent Examiner blog has a post up about a company called SmartMetric, which claims to be in the business of making biometric technologies, but admits it hasn't actually made any money doing that. Instead, it seems to be in the business of being a patent troll. Despite the fact that banks and others have been testing variations on "smart card" technology for many decades, SmartMetric ended up with patent 6,792,464, which it claims covers all kinds of smartcards. Last year, it sued Visa, MasterCard and American Express. And lost.

But why worry about that when it can just sue again?

Yes, even as it's appealing the initial loss, the company has sued the same companies a second time using a nearly identical filing. You can see both filings embedded below. Feel free to do a diff on the two, but Patent Examiner summarizes the two cases this way:

This new lawsuit against MasterCard and Visa concerns both “contact” and “contactless” smart cards (the former are inserted into a card reader, the latter only need to be placed in proximity to a reader), while SmartMetric’s first lawsuit against the credit companies only referred to contactless card systems.

So, basically, after losing, they're just trying to expand what they claim the patent covers. It's hard to see this as anything more than a standard patent troll shakedown of a company that doesn't do anything demanding cash from the companies who do things... even when those things are obvious next steps that were discussed decades before the troll came on the scene.

Permalink | Comments | Email This Story

PayPal Agrees To Help IFPI Cut Off Funding For Sites IFPI Doesn't Like Without Judicial Oversight

Mike Masnick — Mon, 25 Jul 2011 03:08:39 PDT

Neppe alerts us to the news that PayPal has now followed the same path as MasterCard and Visa, in agreeing to the IFPI's plan to cut off payments to sites it doesn't like, without any judicial review. Basically, the IFPI will send info about sites it doesn't like (i.e., describes as "rogue" sites) to the London Police. It's not clear what sort of qualifications the London Police have on complex copyright issues, but okay. If the London Police agree with the IFPI (and so far, they have in 100% of the cases), the information about the sites will be passed on to the three payment processing companies, and they will no longer allow those sites to accept payments. Watch out, Internet Archive (which has been declared an infringing site by some in the industry), you may soon no longer be able to accept donations, thanks to the IFPI's fear of technology.

Permalink | Comments | Email This Story

Wikileaks Can Receive Visa & Mastercard Donations Again... But Visa Doesn't Understand Why

Mike Masnick — Thu, 7 Jul 2011 22:06:00 PDT

Last week, Wikileaks and Datacell threatened to sue Mastercard, Visa and Paypal if it didn't stop blocking payments to Wikileaks. The claims were basically collusion charges, in that all of the major payment companies were blocking payments. Things got strange today, however, when suddenly Datacell announced that payments worked again, and clearly implied that the companies had lifted the blockade. Except, Visa is insisting that it has not lifted its ban on Wikileaks and has no idea how payments are getting through. The details seem a bit sketchy. Some careful wording by Datacell's CEO suggest that he really just found an alternative payment gateway provider, which likely means this is a very temporary loophole, before the payment companies block again.

Permalink | Comments | Email This Story

WikiLeaks Planning Legal Action Against PayPal, MasterCard & Visa

Mike Masnick — Tue, 5 Jul 2011 09:26:06 PDT

There hasn't been much talk lately over the fact that PayPal, MasterCard and Visa all cut off Wikileaks late last year, after the US government freaked out about the release of some State Department Cables. None of the firms has done a very good job explaining why this makes sense (or why they continue to allow other groups, such as the KKK to receive funding, while singling out Wikileaks). I'm sure those three firms, which took quite a public bashing when the news originally dropped, would prefer that there not be any more talk about it. However, Wikileaks and the payment firm they used, DataCell, are apparently planning to file a legal complaint this week against all three firms in Europe. A draft of the complaint, which was obtained by Andy Greenberg at Forbes (linked above and embedded below), claims that the three firms violated Articles 101 and 102 of the EU Treaty, effectively a form of antitrust law. While I tend to think many antitrust claims are merely attacks on successful companies, this seems like a case where they could make sense. Here you have basically the only three ways for most people to transfer money easily, all agreeing to block a single (small) client from receiving money, despite no legal ruling against the operation (hell, charges haven't even been filed). It certainly would make for an interesting case.

Permalink | Comments | Email This Story

IFPI, UK Police, Credit Card Companies Push People To Pirate Music, Rather Than Pay For It

Mike Masnick — Fri, 4 Mar 2011 07:48:56 PST

Bizarre move out of the IFPI. It's gleefully announced a new deal, in conjunction with the London Police and Visa and MasterCard to cut off credit card services to online music stores who the IFPI accuses of selling infringing MP3s. This is really targeting sites like MP3Fiesta, which is sort of a modern version of Allofmp3.com. Of course, what they seem to be missing is that both of these sites were examples of people, who would otherwise likely be downloading totally unauthorized versions, being willing to pay for MP3s at a much more reasonable price. What I never understood was why the music industry never realized that these sites actually showed a business model that worked. Tons of people were happy to pay for the music when the prices seemed much more reasonable. What these services really showed was how much the industry has artificially inflated the price of music.

But, of course, in cutting off credit cards to those sites, two simple things are likely to happen in response: first, those sites will simply find alternative payment means. That may still limit some, but it hardly stops these sites from existing. But, more importantly, if people can't get music at these prices, it seems a lot more likely that they'll shift to totally free options, rather than go back to paying $0.99 per song (or more!). So, effectively, all this move really does is drive more people to stop paying for music. Is that what the record labels pay the IFPI to do these days?

Permalink | Comments | Email This Story

Will Visa, MasterCard, Paypal, BofA & Apple Terminate Relationships With The NYTimes For Revealing Military Secrets?

Mike Masnick — Wed, 22 Dec 2010 10:59:39 PST

Glenn Greenwald has a post highlighting how a NY Times' investigative report on US military action in Pakistan appears to reveal key military secrets concerning plans that have not yet been put in place, and which could certainly put Americans and others in danger:

Indeed, the NYT reporters several times acknowledge that public awareness of these operations could trigger serious harm ("inside Pakistan, [] the movement of American forces has been largely prohibited because of fears of provoking a backlash"). Note, too, that Mazzetti and Filkins did not acquire these government secrets by just passively sitting around and having them delivered out of the blue. To the contrary: they interviewed multiple officials both in Washington and in Afghanistan, offered several of them anonymity to induce them to reveal secrets, and even provoked officials to provide detailed accounts of past secret actions in Pakistan, including CIA-directed attacks by Afghans inside that country.

As he notes, all of this seems a lot more revealing than anything that Wikileaks has done, and a lot more likely to put people in danger. Yet, there's been almost no response, and certainly nothing like the attention paid to Wikileaks -- with calls for trials or even killing the head of Wikileaks. Seems odd, doesn't it?

But, an even bigger point is buried towards the end in an update, where Greenwald asks:

Why aren't Visa, MasterCard, Paypal, their web hosting company and various banks terminating their relationships with The New York Times, the way they all did with WikiLeaks: not only for the NYT's publication of many of the same diplomatic and war cables published by WikiLeaks, but also for this much more serious leak today in which WikiLeaks was completely uninvolved?

And, I think, we can add Apple to that list. After all, if these companies keep claiming that Wikileaks "broke the law" (as most of the companies listed here are saying), why do they not feel the same way about the NY Times?

Permalink | Comments | Email This Story

US IP Czar Gets Companies To Cut Off Unlicensed Online Pharmacies

Mike Masnick — Fri, 17 Dec 2010 13:00:41 PST

Earlier this year, we noted that the US IP Czar, Victoria Espinel, had been making the rounds to ISPs, registrars, payment processors and others to get them to agree to voluntarily start shutting off certain "infringing" sites. Now we see the results of those talks. Espinel has announced that a variety of companies -- including Google, Visa, Mastercard, Paypal and Network Solutions -- have apparently agreed to effectively disappear and cut off certain websites. The focus, for now, is on "unlicensed web pharmacies," with the idea being that these companies will effectively kill off those sites:

Together, the firms hope to tackle every link in the chain that keeps unlicensed pharmacies operating by stopping them showing up in search results, taking their websites offline, delisting the domains they use and stopping payments reaching them.

Think COICA without COICA -- but just with government pressure on companies. Seeing Visa, Mastercard and Paypal on the list certainly isn't surprising, after those three already did the same thing in cutting off Wikileaks. However, it's a bit surprising to see Google agree to this (Update: Google says that it's only agreed to cut off advertising that violates its policies). If there's a trial and these sites are found guilty of violating the law, then I can see cutting them off -- but once again, it appears that this is the government trying to kill off websites, without a trial.

And, yes, it's for "unlicensed web pharmacies," and everyone plays up the spam and the fake (potentially dangerous) drugs. Those are a serious problem. But they also lump in the (quite common) grey market pharmacies as well -- which often allow people to get drugs from outside the country at much more affordable rates. Shutting down fake drug sellers is fine. Shutting down the grey market drug sellers is a bit of a bigger issue.

On top of that, given the recent ICE domain seizures and the whole COICA law -- both of which Espinel has spoken out in favor of -- it's not hard to see how the mandate behind this particular program is quite likely to grow well beyond "unauthorized web pharmacies" to other sites as well. In fact, MasterCard has apparently already agreed to cut off websites deemed "pirate" sites.

Permalink | Comments | Email This Story

Iceland Considers Revoking Visa/MasterCard Licenses For Wikileaks Ban

Mike Masnick — Tue, 14 Dec 2010 13:01:00 PST

With Visa and MasterCard cutting off payments for Wikileaks, it appears that some Icelandic politicians are threatening to remove both companies' operating licenses in that country. Apparently, the Icelandic Parliamentary General Committee has asked both companies to explain what legal grounds they used for cutting off Wikileaks and, without evidence of legitimate reasons, both companies could lose their operating licenses. We had already noted that Icelandic firm DataCell, which was handling the payments for Wikileaks, was planning to sue both companies but it appears that the Icelandic government may help out. Of course, I would imagine that Visa and Mastercard both care about keeping the US government more happy than the Icelandic government...

Permalink | Comments | Email This Story

Lieberman Praises Companies Helping Him Try To Censor Wikileaks

Mike Masnick — Thu, 9 Dec 2010 18:20:00 PST

This should hardly comes as a surprise, but Senator Joe Lieberman has apparently put out a statement, along with Senator Sue Collins, praising companies for following through on their political pressure to try to censor Wikileaks, calling them "good corporate citizens," and saying that people should support those companies for their willingness to bow down to government pressure. Yeah, okay. Even the press reporting on this seem to think Lieberman is simply making stuff up. Witness this paragraph from Wired:

"The WikiLeaks data dump has jeopardized U.S. national interests and the lives of intelligence sources around the world," Lieberman said, though there is no proof or even detailed allegations that the release has endangered any intelligence source.

Lieberman apparently wants the world to believe that censorship is okay because "this is no time for business as usual." It appears that Lieberman really wants to go down in history as the Senator who favors censorship of the press and US companies. Quite a legacy.

Permalink | Comments | Email This Story

Wikileaks Payment Company Plans To Sue Visa & Mastercard Over Cutoff

Mike Masnick — Thu, 9 Dec 2010 07:06:55 PST

With Visa and Mastercard refusing to take payments for Wikileaks, the company that was providing payment services to Wikileaks, Datacell, has announced plans to sue both credit card companies to try to get them to go back to accepting payments. There's no indication of exactly what law Datacell thinks these firms broke. Unless there are more details, this does sound like a bunch of shouting in the wind. As much as I disagree with Visa and MasterCards' decisions to cut off Wikileaks, they are private companies and can refuse service to anyone, no matter how petty it makes them look.

Permalink | Comments | Email This Story

Want To Know Why Visa & Mastercard Cut Off Wikileaks? Because Its Latest Leak Was About Them...

Mike Masnick — Wed, 8 Dec 2010 15:32:00 PST

Visa's slogan used to be "Everywhere you want to be," but apparently one place it did not want to be was on Wikileaks. We've already covered how both Visa and MasterCard cut off Wikileaks quite quickly, with MasterCard even going so far as to claim that it did so because of illegal activity by Wikileaks -- despite no charges or convictions for any actual illegal activity.

Just a day later, it seems, we may have some new insight into why this is. Chris Rhodes was the first of a bunch of you to send over the news that the latest cable leak shows that US diplomats worked hard on Visa and MasterCard's behalf in Russia, where the Russian government was working on a new national payment card system, that would likely deprive Visa and MasterCard of transaction fees in Russia. Convenient timing.

Permalink | Comments | Email This Story

Visa & MasterCard: KKK Is A-OK, But Wikileaks Is Wicked

Mike Masnick — Tue, 7 Dec 2010 10:20:33 PST

Well, it looks like we can add Visa to the list of companies pressured into no longer working with Wikileaks, following a similar move by MasterCard. At least, unlike MasterCard, Visa isn't already claiming that Wikileaks was convicted of a crime. Instead, it's just said that it's suspended any work with Wikileaks "pending further investigation into the nature of its business and whether it contravenes Visa operating rules."

As Charles Arthur points out, the Ku Klux Klan's website points you to a site that takes both MasterCard and Visa -- suggesting the pure arbitrariness of both credit card companies' decision here. It's a bad idea when firms start making decisions for political reasons. There are all sorts of companies out there that take credit cards to support objectionable (to many) activities. Is it really the credit card companies' job to pick and choose who they find objectionable to work with -- and if so, what basis does it use for saying "KKK is okay, but Wikileaks is not"?

This reinforces the point we recently made about the role of corporate intermediaries in being able to aid governments in censorship, even in the absence of a trial or conviction. Either way, this is a really sad statement about both Visa and MasterCard and their willingness to cave to government pressure.

Permalink | Comments | Email This Story

The Fact That A Credit Card Is Patented Is A Selling Point?

Mike Masnick — Wed, 22 Jul 2009 13:26:00 PDT

In the (snail) mail this week I happened to get an ad for the Visa Black Card, which Visa is pitching as "exclusive," though I'm guessing that exclusivity is mostly based on finding enough suckers to pay a $500 annual fee for the card. Anyway, as I was tossing the application into the shredder, one thing caught my eye. The pamphlet cover lists out six marketing bullet points, with the fourth one being that the card is "patent pending." This struck me as odd on a couple of fronts:

Why is the fact that it's patent pending a marketing point? I could maybe sorta barely understand it if it was an issued patent. But a pending one? That means next to nothing other than that you spent some money to file a patent application. To me, that means you may have wasted a lot of money -- which could explain the $500 fee.
A patent on what? On the idea of a "black card" or some other swanky exclusive credit card? Or on the physical card itself?

So, I did a little Googling, and turned up the following: apparently the patent filing (at the time of this announcement, just a provisional patent filing) is is on the physical card itself because it includes "carbon and/or carbon based material." I guess if you're the sort of person interested in spending so much money on a credit card, perhaps you'll pay extra to have carbon in your credit card. Still doesn't make much sense here...

Permalink | Comments | Email This Story

Visa Accidentally Charges People $23 Quadrillion

Mike Masnick — Thu, 16 Jul 2009 09:40:00 PDT

I saw a couple of days ago on Consumerist that a teen had apparently discovered a debit of $23,148,855,308,184,500.00 on her debit card for a purchase at the local drug store. That's $23 quadrillion -- or 2,000 times the national debt. CNN is now reporting that a bunch of folks were hit with this charge (the identical number). Most are also dealing with insufficient funds charges. Visa, not surprisingly, is apologetic, promising to sort things out and agreeing to get rid of any excess charges due to this. However, it does make you wonder... shouldn't Visa's debit cards have some sort of "reality check" included?

Permalink | Comments | Email This Story

Store Payment Info In Your Online Store? Watch Out For Patent Infringement Lawsuits

Mike Masnick — Wed, 3 Jun 2009 07:46:00 PDT

Bill Squier alerts us to the news that a bunch of companies have been sued for daring to store consumer payment information and allow either stored value payments or one-click payments on their site. The article linked here focuses on Apple as a defendant, and notes 14 other companies were sued as well, but in researching this, I found that Joe Mullin actually wrote about another batch of companies (20 of them) that were sued back in April. The earlier lawsuit included Google, Wal-Mart, Bank of America, Capital One, JP Morgan Chase, Mastercard, Visa, Vivendi, Disney and Western Union among others. The more recent lawsuit has (as mentioned) Apple, Best Buy, Amazon, American Express, Barnes & Noble, Citigroup and eBay among others. So... basically any online e-commerce site, credit card company or big bank.

As for the patents in question, they're all a variation on a "method and apparatus for conducting electronic commerce transactions using electronic tokens." The specific patents are 7,376,621, 7,249,099, 7,328,189 and 7,177,838. Reading through the claims, this seems like an incredibly typical online system for storing payment info and seeing if the person can actually pay. Since the patent system defenders among our readers get quite upset whenever I say something seems "obvious" to me, let's flip this around. Can anyone explain how these concepts were not obvious at the time of filing?

Not surprisingly, the cases have been filed in Marshall, Texas... and as Joe Mullin figured out, the guy who is running "Actus" is a lawyer known for representing some infamous patent hoarding companies. He also discovered that the lawyer representing Actus in these lawsuits appears to share an office (or at least the same address) with the son (who is also a patent attorney) of the judge handling the case. At some point, do people start questioning whether or not there's a conflict of interest there?

Permalink | Comments | Email This Story

Visa Tests New Anti-Fraud Card Device, But What About The Data Leaks?

Carlo Longino — Thu, 14 May 2009 23:23:00 PDT

Visa is testing a new type of credit card that's got additional security measures built in as a means of cutting down on "card not present" (CNP) fraud -- the fraudulent sales rung up using stolen credit-card numbers and the security codes that are normally printed on the cards. Visa's new cards have a small screen on the back that displays a six-digit code when the cardholder enters a PIN on the card's keypad, making it sound like Visa has basically built in a tiny version of something akin to the SecurID, a popular two-factor authentication device for corporate computer networks. The devices generate an additional one-time password using an algorithm synced with the system on the other end; the user enters this password when they attempt to log on, or in Visa's case, make a CNP transaction. If the passwords match, the transaction goes ahead. It sounds like a good way to cut down on CNP fraud, but is it just a way to try and gloss over the massive data leaks that see millions of credit-card numbers lost out into the world? It almost seems that if these new anti-fraud cards make it to market, the party line will be "the data leaks don't matter anymore" -- but criminals will still be able to obtain credit-card numbers and make fake cards with the stolen info (for card-present fraud). It might make criminals' lives a little more difficult, but it won't make credit-card fraud impossible. Raising the level of security on credit cards is, without question, a good thing. But unless it involves doing more to stop massive data leaks, it's not enough.

Permalink | Comments | Email This Story

SMS Alerts Over Credit Card Transactions? Patented! Visa Sued

Mike Masnick — Mon, 2 Mar 2009 15:43:00 PST

Let's say you were an engineer at a major credit card company like Visa, and put in charge of watching over new technologies, and thinking about ways that you could make the credit card process better and more secure for card holders. It probably wouldn't take you all that long to come up with a variety of useful measures for checking to make sure certain transactions were legit -- such as alerting cardholders to transactions via SMS. That's nothing particular special or unique, but it's a nice obvious addition, thanks to the fact that SMS text messaging has now become popular. So, you go ahead and implement it... and promptly get sued by some small company that claims a patent on the "invention" of alerting cardholders of transactions by SMS. I'm sure the angry patent system defenders will be quick to show up in the comments claiming that Visa "stole" this "invention," but I'm having a really difficult time understanding how you can support innovation and allow this sort of result to happen.

Permalink | Comments | Email This Story

Escaped The Largest Credit Card Data Breach Ever? Well, Here's Another One...

Mike Masnick — Tue, 24 Feb 2009 18:10:13 PST

Remember last month when a credit card payment processor was forced to admit a security breach that could impact 100 million people? Well, if you were lucky enough not to get caught up in that breach, there's apparently another one to worry about. Visa and Mastercard are issuing a new warning over a different payment processor whose system was apparently compromised as well. At this rate, it's getting silly to have static credit card numbers, since it seems like we're replacing our cards every few months anyway.

Permalink | Comments | Email This Story

Russian Court Says Visa Can't Cut Off AllofMP3 Unit

Carlo Longino — Mon, 16 Jul 2007 17:40:00 PDT

Earlier in the month, Russian authorities shut down the well-known Allofmp3.com site, following complaints from the US government -- and the implication that if they didn't do so, the US would make it hard for Russia to join the World Trade Organization. Of course, the people behind Allofmp3 quickly set up shop at another URL, and went about their business selling dirt-cheap digital music. It's today been reported that Alltunes, another site owned by Allofmp3's parent company, has won a court case against Visa's Russian agent, after Visa refused to process its payments. As the company points out, it's never been convicted of illegal activity, and Visa cut it off after complaints from the IFPI, the international equivalent of the RIAA. It's not clear to what extent Visa and its agents can be forced to =offer their services to a business, however the Allofmp3 folks are correct when they assert that it's not Visa's -- nor the IFPI's -- right to decide when copyright's been violated, particularly when they don't hold any of the copyrights in question.

Permalink | Comments | Email This Story