Saturday, January 31, 2009

ProPay Denies Breach...

The FBI continues to investigate an international fraud scheme that has affected hundreds of small business accounts...
ACH, Banking Account Fraud Scheme

ProPay, Inc. has recently become aware of what appears to be a very large and widespread international fraud scheme involving unauthorized electronic checks (ACH). The scheme has affected millions of people including, unfortunately, a small number of individuals who may be or have been ProPay account holders. To be clear, after internal and external analysis and investigation, ProPay is extremely confident that the stolen bank information came from other sources and not from ProPay.

ProPay has an ongoing effort to monitor our systems and we remain confident in our system security. ProPay's systems fully encrypt client sensitive information in storage as well as in transit. In addition, sensitive client information is masked when it is viewed internally or externally. ProPay is committed to protecting sensitive information and we will continue to adhere to industry best practice security standards. ProPay meets or exceeds the security requirements and data protection as defined by the major card brands (PCI DSS)—Visa, MasterCard, etc.

The fraud scheme mentioned above involves an electronic draft against a checking account ranging in amount from $24.95 – $39.99. The charge appears on the affected individual's checking account statement under one of a variety of names which may include MBilling, MB Moon Park, MB Hot Planet, and PHE Subscription. The business supporting these names represents itself to victims as a third-party billing service, generally billing on behalf of a purported adult website.

With regard to this particular ACH scheme we know the following:

1. This is an international scheme and millions of people (the vast majority of whom have no affiliation to ProPay) have been affected.
2. We know that numerous payment providers, processors, banks, mortgage companies and others have felt the effects of this scheme and have been named in various reports, blogs, etc.

We encourage the following actions to protect your sensitive information from fraudulent activity.

1. Frequently check your bank accounts and credit card statements (even if you don't balance your account) and immediately report suspicious activity.
2. Keep your computer secure by using up-to-date firewall and virus protection software and by restricting access appropriately.
3. Sign up for automatic updates for any Windows Operating System (OS). If you have an OS earlier than XP, we strongly recommend that you upgrade to at least XP and install all Service Packs.
4. Reject any email that asks you to follow a link to a website and input sensitive or personal information.
5. Only do business with secure websites – look for the lock icon in the bottom-right of your internet browser or look for the prefix "https://..." where the "s" indicates a secure site.
6. Strengthen your password – include numbers, symbols and upper and lower case letters. Using a unique password for each service also helps protect your accounts.
7. For more information please see

ProPay has been in contact with law enforcement and will continue to monitor the developments surrounding this particular fraud scheme and will gladly assist, to the extent possible, any ProPay account holders that may have been affected. If you have questions please contact ProPay at (866) 964-0853.

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Dismissal of AmEx Lawsuit Reversed

2nd Circuit Reverses Dismissal of American Express Class Action Lawsuit - MSNBC Wire Services -
ST. PAUL, Minn., Jan. 30, 2009 (GLOBE NEWSWIRE) -- The United States Second Circuit Court of Appeals today reversed the dismissal of a massive antitrust class action brought by merchants against the American Express Company ("Am Ex"). The case alleges that American Express in 1999 began a massive effort to take a share of the standard commodity credit card business away from Visa and MasterCard. However, Am Ex wished to partner with banks in issuing these credit cards. The merchants alleged that Am Ex understood that a high merchant fee would be attractive to the banks; therefore Am Ex illegally forced merchants to pay excessive rates equal to Am Ex's more attractive business and personal charge cards by tying the acceptance of the credit and charge cards together. As a condition of accepting Am Ex's credit and charge cards, Am Ex required merchants to sign away their ability to pursue claims as a class (known as a "class action waiver").

The U.S. District Court in the Southern District of New York granted Am Ex's motion to dismiss the case and send it to arbitration. The small merchants appealed the decision to the Second Circuit Court of Appeals, which found that "the class action waiver . . . cannot be enforced in this case because to do so would grant Amex de facto immunity from antitrust liability by removing the plaintiffs' only reasonably feasible means of recovery."

The policy of putting anti-class action rules in consumer and merchant agreements has been growing enormously in recent years. This case was the first case decided by a U.S. Appellate Court in which it was held that the high costs of the case itself voids such rules because the case could only proceed if all the plaintiffs were allowed to share the costs in a class action. The decision will no doubt be used by plaintiffs in dozens of other cases where defendants have attempted to ban class actions by inserting such a clause in a standard agreement.
Story continues below ↓advertisement | your ad here

The plaintiffs in the case were represented by Friedman Law Group of Manhattan, NY, Reinhardt Wendorf and Blanchfield of St. Paul, MN and Patton Boggs of Washington, DC.

CONTACT: Friedman Law Group
Gary Friedman
212 680-5150 or 917 568-5024

Reinhardt Wendorf and Blanchfield
Mark Reinhardt
843 883-9333

Source: GlobeNewswire, Inc. 2009

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