StormPay
Encyclopedia
StormPay was an electronic money
auction payment processor run by Stormpay Incorporated, a Clarksville, Tennessee
, United States
company founded in October 2002 by John R. McConnell, Jr. and the CEO, Steve Girsky. It allowed anyone with an e-mail address
to buy or sell StormPay Auction items after opening an online account.
Steve Girsky is also the registered owner of Clixsense.com, a Paid To Click
site also based in Clarksville.
s. However, StormPay was not like a bank, where the money in ones account is actually backed by real money. A StormPay user can fund their account with an online check, money order
, or by clicking on sponsored links, purchased by StormPay members themselves, in the StormClix section of the StormPay website
. StormPay (and NetIBA) have also paid commissions for referring new members to the payment process or verification system.
and registered with the Tennessee Secretary of State
by McConnell, indicating that it is not a third-party service. The NetIBA certification process purportedly includes the sending of a PIN
by telephone and a PIN by mail, however, users have also reported that the phone step is occasionally skipped. After being certified, webmasters may place an image on their website to display this fact to potential customers. In the NetIBA FAQ, under the question: "What form of payment do you accept?" the following answer is given: "NetIBA accepts StormPay. NetIBA recommends when shopping online that you use services such as StormPay to ensure that your financial information does not end up in the hands of wrong doers."
, or the mailing of a personal check. There was a $2 fee for withdrawing with a check and using the debit card incurs various monthly account maintenance and individual withdrawal fees. These individual withdrawal fees are in addition to any charges that may be levied by the bank that owns the ATM
used to withdraw money. The debit card is usable Internationally. However, the check is in U.S. Dollars, and costs $20 to be sent by courier, $35 internationally. These fees, and the additional cost of exchanging fees from a US check in other countries, make it not profitable to withdraw by international check unless one's account balance is very high. On 15 May 2006, StormPay added the options to withdraw money directly into U.S. checking accounts with a $1 fee and into e-gold
accounts with a StormPay fee of 5% in addition to e-gold fees.
/ponzi scheme, TymGlobal, in 2002-2003. An order to cease and desist was given by the Tennessee Securities Division. All references to TymGlobal were then removed from StormPay in an attempt to clean up its image, after which it became a general online payment processor usable for any purpose within its Terms of Service. In 2004-2006, StormPay was used almost exclusively by autosurf
websites, Paid To Read sites, high-yield investment programs, money randomizers,gifting clubs, and online auction sales.
or e-gold
. The justification of this move was to prevent the transfer of funds between payment processors, which would increase the likelihood and untraceability of fraudulent money. However, this move was also seen by some as the first step in establishing a monopoly
over its niche market. As a result, many autosurf websites elected to remove other payment options, while others elected to remove StormPay. This occurred despite the fact that StormPay, at one time, provided members with the option to fund their StormPay accounts via e-gold.
By 2 February 2006, StormPay had suspended or frozen numerous StormPay accounts, especially those used by the administrators of autosurf sites, seemingly regardless of whether they complied with the original request. Emails sent to StormPay questioning the issue were responded to with the following:
On 5 February 2006, StormPay posted a second announcement on their website stating that they had "closed the accounts of what appear to be some major ponzi scheme
s", because of "results of investigations into those businesses by outside investigational organizations as well as our own internal investigations. As a result, possible victims of these businesses" had conducted distributed denial-of-service attack
s against them leading to the recent downtime of their service. This is in contrast to their first announcement, only stated that other payment processors had to be removed. The now defunct autosurf
12DailyPro
announced plans to send a lawsuit against StormPay. However, the autosurf was soon discovered to be a ponzi scheme and was ordered to cease and desist.
For a prolonged period spanning February 8 to 10, 2006, the StormPay website was again unavailable due to a DDOS attack.http://news.netcraft.com/archives/2006/02/10/payment_gateway_stormpay_battling_sustained_ddos_attack.html
One result of this controversy is StormPay's conversion to an auction-only site. On 23 March 2006, StormPay announced on its website that it would "no longer accept payments for sales made outside of StormPay Auctions", in order to ensure "a safer online experience for both buyers and sellers" as it would "more closely monitor the products/services sold". This means that all money transferred through StormPay must be accompanied by a product, which StormPay can monitor. As a result, StormPay is no longer usable for "investments" in autosurfs or HYIPs.
The second result of this controversy was Steve Girsky's launch of a second business called Clix Sense. In an attempt to hide his ownership, there is no mention of who owns Clix Sense or runs it and a proxy is used for the name registration.
Being a registered company, records are filed with the Tennessee Department of State and open to public viewing http://www.tennesseeanytime.org/soscorp/details.jsp
, the digital money balance visible in one's StormPay account is not backed up by money in StormPay's bank accounts. This led to a situation in early 2006 where Stormpay was not able to pay out withdrawals requested by users, and many of the users never received their requested funds. http://tlennonfor12dailypro.com/media/12DP_FirstInterimReport.pdf
StormPay no longer accepts credit cards, no doubt due to the massive wave of billing disputes and subsequent chargebacks that occurred as a result of the massive account freezes previously mentioned. The only way to fund a StormPay account is via e-check, which provides none of the consumer protections against fraud and misuse that are statutorily provided to credit card holders.
To date, StormPay has not released the funds it froze back in February 2006, despite StormPay's Terms of Service providing for such funds to be distributed 180 days after being frozen. As a result, many (former) users hold a hostile attitude towards StormPay http://www.amazon.com/dp/B00009XK7J/.
StormPay claims to offer buyer protection. However, the User Agreement includes the clause "At any time you purchase a product or service StormPay is reselling, all liability is on the vendor who contracted StormPay to resell their product or service, and you understand that these purchases are done at your own risk". Because of this, buyers are not refunded if they do not receive the item purchased. https://stormpay.com/stormpay/user/about_us.php?view=u
As seen in the above section, StormPay is heavily criticised for its lack of customer support. Questions asked through the online support feature are likely to get a reply that does not actually answer the question. The reply is almost invariably a template, as opposed to a reply written by a human.
StormPay is not a member of the Better Business Bureau
, although it has generated more complaints to BBB than any other Middle Tennessee or Southern Kentucky business. http://www.sitemason.com/newspub/hWgqiY?id=27593
StormPay does not allow transactions to or from a list of "non-approved countries". https://stormpay.com/stormpay/user/about_us.php?view=u
StormPay is the primary sponsor of the Clarksville Speedway race track, and has funded several of its renovations. StormPay also sponsors the Crate Racin' USA Series of races, which take place on the Clarksville Speedway
. It is speculated that StormPay used its members' funds (as opposed to its profits) for these sponsorships, leading to the problems described above.
Electronic money
Electronic money is money or scrip that is only exchanged electronically. Typically, this involves the use of computer networks, the internet and digital stored value systems...
auction payment processor run by Stormpay Incorporated, a Clarksville, Tennessee
Clarksville, Tennessee
Clarksville is a city in and the county seat of Montgomery County, Tennessee, United States, and the fifth largest city in the state. The population was 132,929 in 2010 United States Census...
, United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
company founded in October 2002 by John R. McConnell, Jr. and the CEO, Steve Girsky. It allowed anyone with an e-mail address
E-mail address
An email address identifies an email box to which email messages are delivered. An example format of an email address is lewis@example.net which is read as lewis at example dot net...
to buy or sell StormPay Auction items after opening an online account.
Steve Girsky is also the registered owner of Clixsense.com, a Paid To Click
Paid To Click
Paid To Click is an online business model that draws online traffic from people aiming to earn money from home. Paid-To-Click, or simply PTC websites, act as middlemen between advertisers and consumers; the advertiser pays for displaying ads on the PTC website, and a part of this payment goes to...
site also based in Clarksville.
Funding/Depositing
The currency used in accounts was United States dollarUnited States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
s. However, StormPay was not like a bank, where the money in ones account is actually backed by real money. A StormPay user can fund their account with an online check, money order
Money order
A money order is a payment order for a pre-specified amount of money. Because it is required that the funds be prepaid for the amount shown on it, it is a more trusted method of payment than a cheque.-History of money orders:...
, or by clicking on sponsored links, purchased by StormPay members themselves, in the StormClix section of the StormPay website
Website
A website, also written as Web site, web site, or simply site, is a collection of related web pages containing images, videos or other digital assets. A website is hosted on at least one web server, accessible via a network such as the Internet or a private local area network through an Internet...
. StormPay (and NetIBA) have also paid commissions for referring new members to the payment process or verification system.
Fees
Opening a StormPay account was free. It was also free to send money to another e-mail address. However, a fee was incurred when receiving funds: if the recipient was NetIBA certified, this was 39 cents plus 2.9% of the amount being received; if not, it was 49 cents and 4.9%. This marks a return to the usual fee structure used by most online payment processors that was also used by StormPay before becoming an auction-only site, but the non-certified fee has been reduced from the level in March 2006, which was 69c + 6.9%. Additionally, for a brief period in April and early May 2006, there was no fee for NetIBA certified accounts and it was 2% otherwise.Certification
Being NetIBA certified costs $19.95 a year. It was claimed to be a third-party identity verification service. It is also located in Clarksville, TennesseeClarksville, Tennessee
Clarksville is a city in and the county seat of Montgomery County, Tennessee, United States, and the fifth largest city in the state. The population was 132,929 in 2010 United States Census...
and registered with the Tennessee Secretary of State
Tennessee Secretary of State
The Tennessee Secretary of State is the state secretary of state for the State of Tennessee.The office is created by the Tennessee State Constitution. The Secretary of State is responsible for many of the administrative aspects of the operation of state government of Tennessee...
by McConnell, indicating that it is not a third-party service. The NetIBA certification process purportedly includes the sending of a PIN
Personal identification number
A personal identification number is a secret numeric password shared between a user and a system that can be used to authenticate the user to the system. Typically, the user is required to provide a non-confidential user identifier or token and a confidential PIN to gain access to the system...
by telephone and a PIN by mail, however, users have also reported that the phone step is occasionally skipped. After being certified, webmasters may place an image on their website to display this fact to potential customers. In the NetIBA FAQ, under the question: "What form of payment do you accept?" the following answer is given: "NetIBA accepts StormPay. NetIBA recommends when shopping online that you use services such as StormPay to ensure that your financial information does not end up in the hands of wrong doers."
Withdrawing
StormPay allows users to withdraw money via a debit cardDebit card
A debit card is a plastic card that provides the cardholder electronic access to his or her bank account/s at a financial institution...
, or the mailing of a personal check. There was a $2 fee for withdrawing with a check and using the debit card incurs various monthly account maintenance and individual withdrawal fees. These individual withdrawal fees are in addition to any charges that may be levied by the bank that owns the ATM
Automated teller machine
An automated teller machine or automatic teller machine, also known as a Cashpoint , cash machine or sometimes a hole in the wall in British English, is a computerised telecommunications device that provides the clients of a financial institution with access to financial transactions in a public...
used to withdraw money. The debit card is usable Internationally. However, the check is in U.S. Dollars, and costs $20 to be sent by courier, $35 internationally. These fees, and the additional cost of exchanging fees from a US check in other countries, make it not profitable to withdraw by international check unless one's account balance is very high. On 15 May 2006, StormPay added the options to withdraw money directly into U.S. checking accounts with a $1 fee and into e-gold
E-gold
e-gold is a digital gold currency operated by Gold & Silver Reserve Inc. under e-gold Ltd., and allowed the instant transfer of gold ownership between users until 2009 when transfers were suspended due to legal issues. e-gold Ltd...
accounts with a StormPay fee of 5% in addition to e-gold fees.
Chargebacks
StormPay allows the account of a seller to be charged back if the buyer claims non-receipt of the auction item. However, this does not apply to services, as in the Terms of Service. The fee for a chargeback is $35, and, as documented on Money Maker Group Forum, this may cause a negative balance to appear in one's StormPay account. The balance may be restored automatically by StormPay by deducting the necessary funds from one's attached bank account. If one then attempts to charge back StormPay from the bank, StormPay will immediately freeze the account and alter the balance to -$10,000. Excessive complaints by users will also cause an account to be frozen, which prevents the owner from sending or receiving money, but does permit the refunding of money, if available, to previous payers. According to terms, the funds in frozen accounts may be released 180 days after the freezing, however the majority of frozen accounts were suspended in February 2006, and remain suspended.TymGlobal
McConnell, one of the founders of StormPay, had previously used the service as the payment processor for a pyramidPyramid scheme
A pyramid scheme is a non-sustainable business model that involves promising participants payment or services, primarily for enrolling other people into the scheme, rather than supplying any real investment or sale of products or services to the public...
/ponzi scheme, TymGlobal, in 2002-2003. An order to cease and desist was given by the Tennessee Securities Division. All references to TymGlobal were then removed from StormPay in an attempt to clean up its image, after which it became a general online payment processor usable for any purpose within its Terms of Service. In 2004-2006, StormPay was used almost exclusively by autosurf
Autosurf
Autosurfs are traffic exchanges that automatically rotate advertised websites in one's web browser. Therefore, they are capable of bringing a large amount of traffic to the advertised websites. Members earn credits for each site that they view, which can then be spent to advertise members' sites by...
websites, Paid To Read sites, high-yield investment programs, money randomizers,gifting clubs, and online auction sales.
Controversy with autosurfs
On 31 January 2006, StormPay formally announced on its website that it would not allow itself to be used on any site which also offered another payment processor, such as PayPalPayPal
PayPal is an American-based global e-commerce business allowing payments and money transfers to be made through the Internet. Online money transfers serve as electronic alternatives to paying with traditional paper methods, such as checks and money orders....
or e-gold
E-gold
e-gold is a digital gold currency operated by Gold & Silver Reserve Inc. under e-gold Ltd., and allowed the instant transfer of gold ownership between users until 2009 when transfers were suspended due to legal issues. e-gold Ltd...
. The justification of this move was to prevent the transfer of funds between payment processors, which would increase the likelihood and untraceability of fraudulent money. However, this move was also seen by some as the first step in establishing a monopoly
Monopoly
A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity...
over its niche market. As a result, many autosurf websites elected to remove other payment options, while others elected to remove StormPay. This occurred despite the fact that StormPay, at one time, provided members with the option to fund their StormPay accounts via e-gold.
By 2 February 2006, StormPay had suspended or frozen numerous StormPay accounts, especially those used by the administrators of autosurf sites, seemingly regardless of whether they complied with the original request. Emails sent to StormPay questioning the issue were responded to with the following:
- Unfortunately, we are unable to process any further transactions on behalf of the merchant. StormPay Inc. certainly understands your concerns regarding this situation. However, the funds of this merchant were frozen by an outside organization pending further investigation. To protect the integrity of the investigation we are unable to release any details at this time. Once the funds are released, StormPay will release the funds to claimant(s) for disbursement.
On 5 February 2006, StormPay posted a second announcement on their website stating that they had "closed the accounts of what appear to be some major ponzi scheme
Ponzi scheme
A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from any actual profit earned by the individual or organization running the operation...
s", because of "results of investigations into those businesses by outside investigational organizations as well as our own internal investigations. As a result, possible victims of these businesses" had conducted distributed denial-of-service attack
Denial-of-service attack
A denial-of-service attack or distributed denial-of-service attack is an attempt to make a computer resource unavailable to its intended users...
s against them leading to the recent downtime of their service. This is in contrast to their first announcement, only stated that other payment processors had to be removed. The now defunct autosurf
Autosurf
Autosurfs are traffic exchanges that automatically rotate advertised websites in one's web browser. Therefore, they are capable of bringing a large amount of traffic to the advertised websites. Members earn credits for each site that they view, which can then be spent to advertise members' sites by...
12DailyPro
Charis Johnson
Charis F. Johnson was the founder and administrator of the investment autosurf 12DailyPro. Johnson founded LifeClicks, LLC, the company which owns 12DailyPro, in her apartment home in Charlotte, North Carolina, United States....
announced plans to send a lawsuit against StormPay. However, the autosurf was soon discovered to be a ponzi scheme and was ordered to cease and desist.
For a prolonged period spanning February 8 to 10, 2006, the StormPay website was again unavailable due to a DDOS attack.http://news.netcraft.com/archives/2006/02/10/payment_gateway_stormpay_battling_sustained_ddos_attack.html
One result of this controversy is StormPay's conversion to an auction-only site. On 23 March 2006, StormPay announced on its website that it would "no longer accept payments for sales made outside of StormPay Auctions", in order to ensure "a safer online experience for both buyers and sellers" as it would "more closely monitor the products/services sold". This means that all money transferred through StormPay must be accompanied by a product, which StormPay can monitor. As a result, StormPay is no longer usable for "investments" in autosurfs or HYIPs.
The second result of this controversy was Steve Girsky's launch of a second business called Clix Sense. In an attempt to hide his ownership, there is no mention of who owns Clix Sense or runs it and a proxy is used for the name registration.
Being a registered company, records are filed with the Tennessee Department of State and open to public viewing http://www.tennesseeanytime.org/soscorp/details.jsp
Criticisms
According to a legal firm under contract with the SECUnited States Securities and Exchange Commission
The U.S. Securities and Exchange Commission is a federal agency which holds primary responsibility for enforcing the federal securities laws and regulating the securities industry, the nation's stock and options exchanges, and other electronic securities markets in the United States...
, the digital money balance visible in one's StormPay account is not backed up by money in StormPay's bank accounts. This led to a situation in early 2006 where Stormpay was not able to pay out withdrawals requested by users, and many of the users never received their requested funds. http://tlennonfor12dailypro.com/media/12DP_FirstInterimReport.pdf
StormPay no longer accepts credit cards, no doubt due to the massive wave of billing disputes and subsequent chargebacks that occurred as a result of the massive account freezes previously mentioned. The only way to fund a StormPay account is via e-check, which provides none of the consumer protections against fraud and misuse that are statutorily provided to credit card holders.
To date, StormPay has not released the funds it froze back in February 2006, despite StormPay's Terms of Service providing for such funds to be distributed 180 days after being frozen. As a result, many (former) users hold a hostile attitude towards StormPay http://www.amazon.com/dp/B00009XK7J/.
StormPay claims to offer buyer protection. However, the User Agreement includes the clause "At any time you purchase a product or service StormPay is reselling, all liability is on the vendor who contracted StormPay to resell their product or service, and you understand that these purchases are done at your own risk". Because of this, buyers are not refunded if they do not receive the item purchased. https://stormpay.com/stormpay/user/about_us.php?view=u
As seen in the above section, StormPay is heavily criticised for its lack of customer support. Questions asked through the online support feature are likely to get a reply that does not actually answer the question. The reply is almost invariably a template, as opposed to a reply written by a human.
StormPay is not a member of the Better Business Bureau
Better Business Bureau
The Better Business Bureau , founded in 1912, is a corporation consisting of several private business franchises of local BBB organizations based in the United States and Canada, which work through their parent corporation, the Council of Better Business Bureaus .The Better Business Bureau, through...
, although it has generated more complaints to BBB than any other Middle Tennessee or Southern Kentucky business. http://www.sitemason.com/newspub/hWgqiY?id=27593
StormPay does not allow transactions to or from a list of "non-approved countries". https://stormpay.com/stormpay/user/about_us.php?view=u
StormPay is the primary sponsor of the Clarksville Speedway race track, and has funded several of its renovations. StormPay also sponsors the Crate Racin' USA Series of races, which take place on the Clarksville Speedway
Oval track
Oval track racing, also known as oval racing, is a form of closed-circuit automobile racing that is contested on an oval-shaped track. An oval track differs from a road course in that the layout resembles an oval with turns in only one direction, almost universally left...
. It is speculated that StormPay used its members' funds (as opposed to its profits) for these sponsorships, leading to the problems described above.