The Epro-gold, 12 Daily , Stormpay Et Al. Flap

THE ePRO-gold, 12 DAILY , STORMPAY et al. FLAP

Posted By: hobie <Send E-Mail>
Date: Thursday, 9 February 2006, 1:46 a.m.

Hi, Folks -

Some essential background:

"12 Daily Pro" is a popular autosurfing site that has been online since April 2005. You pay them a membership "upgrade" fee of between $6 and $6000, then 'surf' about 5 minutes each day, viewing a collection of ad or promotional pages. They then pay you back at 12% per day of what you'd paid them, for 12 days. For the processing of all these payments, 12 Daily Pro in December was using the services of two online payment processors, e-gold and StormPay.

"e-gold" is one of the earliest of all "online payment systems", having been in operation since 1996. Money in e-gold's system is backed 100% by gold metal, they say, by original design. From text found at the e-gold web site:

e-gold is the only payment mechanism that is truly global, enabling any merchant to accept payment online even if the payer lives in a third world country, has no credit card, or is perhaps 'unbanked' altogether.
e-gold Ltd. is a Nevis, West Indies, business entity.
"INTgold", apparently based in Texas, is something of an e-gold "clone". I don't know whether INTgold, like e-gold, backs its users account holdings 100% with gold metal.

"StormPay" is something of a PayPal clone, based I think in Tennessee. StormPay works with US dollars (not gold metal) and takes a non-trivial "bite" (from about 3% to about 7%, depending on account verification status) from received amounts as fees for their services. StormPay's business model is that it is a "reseller" of services or products, offered by its users.

"EMO" is Electronic Money Order Corp., an online payment system operating in US-dollars that specializes in printable "money orders" that are depositable at any bank.

Here's the story so far:

In December, 12 Daily Pro experienced some problems in processing payments to and from its members, by way of e-gold. At one point the e-gold site was offline and inaccessible for about 36 hours, a truly rare situation for e-gold. The frustration and upset expressed in notices from 12 Daily Pro's admin "Charis" during that time was understandable.

In early January it was revealed that e-gold had received a visit from "US Government" agents, presumably the FBI and/or Secret Service (both were rumored), which was the cause of the 36-hour offline period. Agents had come with a warrant for certain of e-gold's records. It turned out that e-gold had far more records than FBI had expected. What had been thought would be a 4-hour visit turned into a 36-hour one, because of that. A later report says that the search was conducted at Gold & Silver Reserve, Inc. (in Melbourne, Florida), "contractual Operator and primary dealer for e-gold."

Apparently online payment processor INTgold also was visited during December. Rumors at the time were that INTgold had been found wanting in some way, and that snail mail letters sent to INTgold were being opened by postal inspectors and then returned to the sender. Rumor at that time was that INTgold might not come back online - however, the INTgold site _is_ online today and appears to be in normal operation. (Perhaps a Reader will write with more details on whatever happened, there...?)

Then in the January 9 issue of Business Week, an article about FBI's visit to e-gold appeared. The article alluded to all the possibly not-nice uses terrorists and other unsavory folks might use the e-gold system for - but the article made very little mention of the central fact that e-gold maintains a 100% gold-metal backing of its users' funds. Instead, the impression on reading the article is only that "e-gold is just another online payment system."

On hearing of the Business Week article, 12 Daily Pro immediately dropped e-gold as one of its payment options for its members, leaving many members then in the lurch. 12 Daily Pro's stated policy had been that they would pay their members only to the very account from which the members had paid 12 Daily Pro. But now, any member who had paid-in by way of e-gold had to establish some other, different account, in order to receive pay-out from 12 Daily Pro.

12 Daily Pro offered two options: Members could set up StormPay accounts; or members could set up EMO accounts. Former e-gold members (perhaps grumbling about this requirement, realizing that they were about to accept Federal Reserve Notes as pay-out for the gold metal they had given 12 Daily Pro as pay-in) set about opening new accounts with one of those two payment processors.

Monday, January 30, 12 Daily Pro reported that StormPay had decided it would no longer serve as payment processor for 12 Daily Pro, unless all other processor options were removed from 12 Daily Pro's operations. The reasons given were a bit vague but related to "money-laundering" and so on, perhaps more a suspicious precautionary move on StormPay's part than anything else.

12 Daily Pro, obviously flummoxed by this, proceeded to take steps to meet StormPay's demand. 12 Daily Pro members who had begun setting up EMO accounts now had to start all over again, and set up a StormPay account instead.

Friday, February 3, StormPay announced to its members that it would no longer work with "autosurf" sites that were not of the "traditional model" like StormPay's own StormClix, and reportedly was 'freezing' related accounts of non-traditional autosurfs. StormPay cited item 17 in its Terms of Agreement, which reads in part:

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.

It's possible 12 Daily Pro believed they did not match the description of item 17 as quoted above. 12 Daily Pro's terms stipulate that money paid to 12 Daily Pro is "membership fees" and not refundable or to be returned as though it were "investment principle".
It's likely StormPay's decision may have impacted 100+ autosurf web sites, all at once. One such site, newer than 12 Daily Pro, called AlienTrust, reportedly had $6.9 million in users' funds abruptly frozen in StormPay accounts, affecting 15-20,000 users. 12 Daily Pro pointed out that StormPay didn't seem to have had a problem with 12 Daily Pro's business model at the time StormPay was receiving and processing their program's payments.

Sunday, February 5, a rumor was flying that FBI was standing at StormPay's shoulder, and that the whole matter was the result of FBI's investigating all autosurf sites. This rumor is difficult to confirm, as FBI generally won't comment on an open investigation. The Canadian source of that rumor asserted (without visible substantiation) that FBI was particularly seeking to identify "tax evaders".

A different rumor speculates that the 12 Daily Pro / StormPay matter may be a repeat of "the eBiz debacle" of several years ago. At least one person, who was on hand for that one and perhaps lost a considerable amount, sees signs in the developing 12dp/SP story that seem all too familiar, to him. (Sorry, I don't have those details; if I should find out more about eBiz, I'll let you know.)

Most recently, StormPay has been cancelling payment orders placed by 12 Daily Pro members, and via charge-back has been returning funds already disbursed to 12dp members' StormPay accounts, back into 12dp's StormPay accounts, or so it appears. A second possibility is that 12 Daily Pro has ordered the charge-backs themselves and StormPay is simply fulfilling those orders. StormPay is staying relatively quiet during all this, so it's hard to be sure whose actions these charge-backs are.

As it turns out, a lot of college students may be 12 Daily Pro members and have been affected by this. February 6, this article appeared at Brigham Young University's NewsNet:

http://nn.byu.edu/story.cfm/58288

Please DO read that article, as it includes information not found elsewhere, including on a "cease and desist" order apparently issued on StormPay and/or on its same-ownership companion company, TymGlobal, reportedly including charges of operating a pyramid or ponzi scheme and failure to register a securities offering, so the NewsNet article says.

Here's one paragraph from the above article:

There is one complaint against 12daily Pro on file with the attorney general of North Carolina. Walter Slayter, of Crossett, Ark., filed a complaint Jan. 26, saying 12daily Pro owes him $12,000 from an account closed Dec. 10, 2005. Slayter claims 12daily Pro will not answer phone messages, e-mails or faxes. Slayter's report says the money came from a credit card and retirement savings and that E-gold was the payment processor he used.
It's possible Mr. Slayter fell victim to the e-gold processing difficulties, and that it's a mistake that can be corrected versus anything of nefarious intent. 12 Daily Pro normally allowed itself 7 days in which to make payment, following the 12-day auto-surfing cycle. That means 12 Daily Pro was probably preparing to pay Mr. Slayter just at the moment FBI and/or other agents paid their visit to the GS&R offices and caused e-gold's system to go offline for 36 hours. It's also true that 12 Daily Pro is largely "incommunicado" by email or telephone insofar as its members are concerned, relying on an inconvenient "trouble ticket" system instead.
The BYU NewsNet article gives e-gold short shrift:

12daily Pro no longer accepts E-gold payments. A BusinessWeek article from Jan. 9 found E-Gold was the common denominator in online child pornography, money laundering and identity theft.
I consider that sentence to be a misstatement, lacking in breadth and context necessary to understanding. Rather than "the" common denominator I'd have said "a" common denominator, but there are good reasons for that, not the least of which is that e-gold has been online longer than almost all other payment processors and thus is more widely known in certain circles. Another reason: e-gold does not do "charge-backs". Once a "spend" is made, it's made, and there's no calling it back - unlike with StormPay.
From a letter at the e-gold site, here:

https://www.e-gold.com/letter.html

...in response to the Business Week article (my bolding):

Thanks to e-gold, for the first time in history, normal people of modest means worldwide have the option of using currency that is designed from the ground up to be immune to debasement, with a governance model that precludes even its management and founders from having the power to subvert it.

At this hour we have no clear idea whether the strange saga detailed above is a result of hard-working government agents dutifully serving to protect the public; or, a most elaborate ruse that in the end will benefit just a handful of people who have schemed together to suck money from a lot of people's pockets and into their own; or, whether it's just a "comedy of errors" being played upon the stage in this age of the Patriot Act. The Canadian writer of the February 5th rumor asserted that it's all about "income tax", and that FBI is investigating all autosurf programs, looking expressly for "tax evaders."
We don't know, today. As they say: "Developing...."

--hobie

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New Money

Posted By: michaeldonovan <Send E-Mail>
Date: Thursday, 9 February 2006, 9:15 a.m.

In Response To: THE e-gold, 12 DAILY PRO, STORMPAY et al. FLAP (hobie)

Around 1972 I wrote a short article in the now defunct Manhattan Gazette. It was called 'Why Pay'. Computers were just coming into use but there were no PCs or such. The story, made up, concerned a trade club where people dealt in 'credits'. At the very end of the story I wrote a disclaimer, said clearly that I made it up.

The IRS got involved. Now I understand why. Coining money, which in a sense that was, is power. That is why that power is reserved by law. I then learned, (way back then), that the government was very concerned about 'green stamps'. It was in a sense money.

Seems the IRS never read the entire article as was embarrassed when they saw the disclaimer!

But this does emphasize, as does Hobie's post, that new forms of money will naturally come about. Also, economies will go more local, particularly in the area of essentials. Trading clubs are very quietly popping up.

In the United States the biggest crop, and what the most money is spent on, is lawn.
Michael Donovan