Date archives "March 2006"

The Stormpay Saga (scam?!)

Stormpay is a online payment processor, just like PayPal. Unlike PayPal, they allow their services to be used for multi-level marketing, adult entertainment, gambling, and until recently programs known as Auto Surfs.

Auto Surfs are like traffic surfers, where you surf through a number of other peoples websites, building up credits to have your website viewed by other people doing the same thing. Obviously this is incredibly tedious work, and the quality of traffic is zero (it won’t make any sales).

Auto Surfs differ to traffic surfers because you can minimize your browser window and leave it surfing all the sites over night while you are asleep. That makes the traffic credits you are building up worth zip, because no one actually has to look at your website.

So what is the point of the Auto Surfs if the traffic is worthless and a waste of bandwidth? Well, if you pay the company some money to “upgrade” your account,then you can receive commission on all your surfing. So you might upgrade your account to a $100 level, and earn $10 commission for each day of surfing you are doing for 15 days. So for your $100 “upgrade” you get $150 back in commission.

It doesn’t take a financial genius to realize that this is just a money moving scheme akin to a ponzi, masquerading as a legitimate webmaster traffic tool. No such investment can pay out the interest rates promised by these companies in the time periods they offer.

The money does infact come from other members “upgrading” their account. So when you boil down to it, these programs are ponzi’s, which are illegal.

What’s the point of the above information? Well, in Stormpay’s terms, it explicitly states that ponzi’s, pyramid schemes, gifting programs and other forms of financial fraud are not allowed to use their services.

So…these autosurfs are in the wrong if they are using Stormpay as a payment processor? Well, yes, technically they are. But on the flip side, Stormpay knew that autosurfs were using their services for months and months. They even verified the identity of several owners of autosurfs.

Because Stormpay charges extortionate fees due to the high risk industries they serve, they made a small fortune in fees collected from all the money flying around.

At the start of February, they froze the accounts of various auto surf companies, on the pretense that they were operating against the terms laid out in their Terms & Conditions – which technically they were. But why did it take them almost a year to decide to take any action? In the meantime collecting thousands of dollars a day in fees.

So, with the accounts of these autosurfs frozen, people suddenly realized that they could stand to lose a lot of money (when the ponzi collapsed, I don’t know what they would have done), so in their thousands, they started doing chargebacks on their credit cards. Unfortunately the credit cards honoured these requests and took the money back that Stormpay had accepted.

Now the fallout from this situation is just making itself felt. Stormpay is following the money trail of all the people that profited from the autosurfs (with other peoples money) and returning it to the main autosurf accounts for “redistribution to the rightful owners”.

The knock on effect that this is having is tremedous. I run a membership site that charges $47 per year or $97 for a lifetime membership. Last week I started to notice that dozens of chargebacks were appearing. Soon my account was over $1000 in the red. Fortunately for me I didn’t have a bank or credit card account associated with my Stormpay account or else I’m sure I would have been charged the difference.

My Stormpay account is now frozen and I cannot login due to it being suspended.

In total, I have lost over $6000 due to the actions of autosurfs and Stormpay – whom I think are both to blame.

The entire chain of events that I have described above was a disaster waiting to happen. Once the autosurfs collapsed (ie. there’s not enough new money coming in to payout the older ‘upgrades’), people would have started doing charge backs. By intervening when it did, Stormpay simply speeded up the process.

Who’s to blame?
Answer: Everyone involved in the autosurf arena.

Autosurfs are to blame because they were operating ponzi’s and allowing a payment processor which could be funded by credit card, and could therefore be charged back.

Stormpay are to blame because they allowed the autosurfs to operate using their services with full knowledge of what was going on – PayPal wouldn’t have allowed it for a second.

Members who ‘upgraded’ are to blame for putting money into a high risk financial scheme by using their credit cards! If you haven’t got the money to waste in pie in the sky opportunities, don’t go taking out a high interest loan which must be paid back no matter what.

Unfortunately for stormpay, they may have thought that they were doing the right thing, but they have f%&ked up big time, because they’ll never recover from this 🙂