As you probably know, last two weeks were full of drama for auto surfers.
Many auto surf programs folding, suspending activities, moving from StormPay to other payment processors etc.
It makes no sense speculate about who is evil in this case, because we have no information on what is really happening.
Any way, it is useful to know opinion of d-currencies professionals.
Today I'd like to share with you interesting comment coming from
CAPITALEX.
QUOTE
...
Capitalex.com Inc.
"Reliable gold currency exchange solutions"
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February 10, 2006
THE STORMPAY CONTROVERSY CONTINUES
The following was posted on our blog http://blog.capitalex.com by camus:
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looks like your comments are right on the money...
HYIP + credit cards + "identity verification" = disaster
I found the following anonymous comment on another list (e-gold list).
Don't know how much you goldbugs follow the non-gold processing clown of
StormPay, but since the list was buzzing about itsnotgold, here goes:
Stormpay is in a world of hurt with the collapse of some hyips that SP
was processing for. Since creating NetIBA certification and it being so
easy to get with bogus ID, some hyips and autosurf ponzis have been
using SP recently and now have croaked. Since a lot of ScumPay's
customers funded with credit cards....oh my, charge backs are flying into
SP and some banks are now reversing transactions from last week where
the customer didn't dispute, the bank just decided no SP transactions
allowed any more.
To make matters worse, very successful ponzi 12DP went to withdraw a
large sum of SP and SP just sat on it instead of releasing it. Even
though 12DP is
NetIBA Certified and all, SP decided to withhold the
money until 12DP agreed to no longer accept EMO; SP had to be the
exclusive processor to stop dad gum
money-laundering and fraud. Yeah,
right. So 12DP succumbed to the extortion and dropped EMO. Only problem
was that then SP still didn't release any funds due to what they claim
is an
outside agency investigating. Strange that this agency has left
alone the 12DP bank accts and EMO accts that are still in use. Hmmmm.
So, another is about to bite the dust hard. It appears SP is basically
insolvent. A really high-flying hyip called profits4investing too
announced it was dead Monday and a few million had been spent into it
with a lot not paid out as the site had been down for 2 weeks.
Charge backs had been happening during those 2 weeks, but I'm sure it was
nothing like what has happened since Monday.
SP has always sucked and now they have dug their own grave by accepting
credit card funding for ponzis and getting hammered by banks for doing
it. All those chargeback fees, holdbacks suddenly required and increased
discount rates can make you go bust quickly. I have never liked SP-a
redneck's version of PayPal and PP isn't who you want to model yourself
after-so good riddance. It looks like the dying phase won't be much longer.
NUK
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Capitalex.com's Conclusion
There will always be people who invest in HYIPs, get-rich quick
schemes or autosurfs. They should be allowed to do so as long as
they know what they are investing in. The only problem is, many
times they don't know, or - even worse - they really believe that
they are participating in a legitimate investment. Hardly any HYIP
operator will state the truth, i.e. "this is a ponzi, it will last
as long as we can make payouts". Instead, most operators falsely
claim that they are generating high returns by investing in Forex,
real estate, etc., a deception which in most cases can only be
classified as fraud.
As for Stormpay, we assume that they had good intentions and
simply wanted to grow their business. However, it is clear that
their gamble has failed and that they are now being hit with
charge backs from thousands of angry and dissatisfied auto surfers.
As discussed in a previous issue of the Capitalex.com newsletter,
Stormpay had lured 12DP (an autosurf/HYIP) away from e-gold and
EMO with the dubious pretense of preventing fraud. But shortly after
12DP had exclusively switched to Stormpay, Stormpay froze 12DP's
account and reversed many transactions. The result? Instead of
auto surfers being angry at 12DP for running a ponzi and not telling
the full truth about it, they are now angry at Stormpay because they
blame Stormpay for crashing 12DP.
e-gold is different in that it is "hard money" per se, i.e. spends
can't be revoked, nor does e-gold meddle in the affairs of its
account holders. At the same time, it is still possible to buy e-gold
by credit card through independent exchangers such as GoldNow. The
clients of these exchangers can't charge back their credit cards even
if they later "lose" the e-gold because as far as their dealings with
the exchanger are concerned, they got exactly what they paid for...
e-gold. And even if they do succeed with a chargeback or use a stolen
credit card, it only hurts the exchanger (who charges a high fee, in
the range of 15%, to mitigate this risk) and not e-gold itself.
This distributed business model is a stroke of genius as it isolates
e-gold from funding risks, disputes and fraud, while at the same
time allowing inflated "soft money" (credit card payments etc) to
enter the system - at the sole risk of exchangers, which are required
to specialize in fraud prevention if they don't want to go out of
business. The obvious benefit is that unlike Stormpay or PayPal,
e-gold simply can't fail for financial reasons, as long as the gold
is really there and as long as they aren't taken down by the government.
The next decade will show whether e-gold is an idea whose time has
come and if its "hard money" paradigm (and the massive cost savings
on part of merchants that come with it) will gain the mass market
appeal it needs to outlive the "soft money" approach used by PayPal
and others.
P.S. Confused about "hard money" vs. "soft money"? Check out the
May Scale at
http://interestingsoftware.com/mayscale.html
Read more about CAPITALEX