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Epoch's Strained Cash Flow
2003-06-11 09:02:06

Dear Valued Client:

As you may be aware, MasterCard fined Paycom $1.5 million several weeks ago. Our bank held funds from subsequent settlement proceeds at that time. Paycom has no plans to pass these fines through to you, as our portfolio was not out of compliance nor should we have been subject to a fine under any MasterCard Fine Program.

As you may also be aware, Paycom has filed a lawsuit in Federal court here in Los Angeles against MasterCard for the above and many other issues related to MasterCard's unfair dealings with Paycom.

The $1.5 million fine and the cost of litigation has strained our cash flow. As a result, we must adjust payment days from Tuesdays to Fridays, beginning next week. Payments due today, Tuesday, June 10th are being made today. Payments due next week, on the 17th will be made on Friday, June 20th, a delay of 72 hours. Payments to Resellers will not be affected and Resellers will continue to be paid on Tuesday's. We are projecting that we will be able to return to Tuesday payments as circumstances change. We are not projecting any further delays, nor do we believe that any additional fines should be levied.

Paycom fully understand that delays in payments are problematic to our clients and a reminder of situations in Paycom's past. You can be assured that those days are gone. This issue is related to the MasterCard fine and the costs associated with the lawsuit. Over the past 3 years we have worked diligently to regain your confidence in our ability to pay you on time, or to keep you informed before a delay. This is one of those times that we all dread; yet it is unavoidable. We want to give you as much notice as possible about this delay, albeit only 72 hours.

Clay, Joel and I are asking for your continued support, confidence and loyalty to us and to Paycom. We are working hard and fighting hard for our mutual success.

Thank you,

Chris Mallick
Chief Executive Officer

Nevermind writes on GFY: A very good friend of mine is an antitrust lawyer, and he says that antitrust cases are extremely expensive to litigate -- even more so than regular lawsuits --- and very difficult to prove.

I'm not surprized that they're not passing on the fines to webmasters because, their lawsuit states that in some cases, they can't pass on the fines even if they wanted to.

Dig420 writes: I'm sticking with Epoch, they've always come thru tough times in the past with flying colors and they're smart enough to keep the boat afloat.

SoCalCash writes: EPOCH is the bomb and SoCalCash supports them %100 as we feel any processor that is written up in FORBES magazine(on a good note), sues mastercard and does not allow kiddie porn from the start has the tools to keep this industry moving forward.

JFK writes: Good for them, they are here informing people instead of hiding. A lot of other companys should take note!

BluMedia writes: Paycom kicks ass. I am very happy they let everyone know about the payment delay. This shows they are very professional and care about their webmasters instead of leaving us in the dark. I have no problems with waiting a few extra days for payment.

Lenny2 writes: Epoch is a class act, 2 weeks notice for a 72 hour delay is plenty. They could have easily changed pay periods from weekly to bi-monthly (like some other major processors do) and called it a "policy change" and improved their cash flow by much more than 72 hours. Instead they told the truth, very classy. AND payments to resellers aren't delayed at all, so your webmasters will still get paid on time as always.

Nevermind writes: If you read their lawsuit, they were basically fined for two things:

1) Going over Mastercard's 1 percent chargeback threshold.

2) Issuing too many refunds "in lieu" of chargebacks which, Mastercard claims, violates their rules.

If your chargebacks are more than .5 percent, and your refunds also exceed .5 percent, Mastercard starts counting refunds as chargebacks.

Obviously Epoch is disputing all of this in their lawsuit and says Mastercard is treating them unfairly.

How does an IPSP make money with only a 15 percent or less fee? Huge volume.

Which means the IPSP has to listen to their big clients and become partners with them. The big guys want the sleazy billing tactics because they make more money with it in the short run.

And the IPSPs go along because they make more money too.

The problem is that it pisses off Mastercard et. al., and getting in line with Mastercard loses you a ton of money. Compliance is very expensive.

So the IPSPs tend to blow it off until they're fined to death and, by then, it's too late and Mastercard is threatening to cut them off.

The bottom line is that the financial incentives create a conflict of interest of sorts.

Visa and Mastercard make their money by protecting the consumer. If they protect the consumer, the customer uses their cards more and they make more money.

The online porn industry makes its money by screwing the consumer. Visa and Mastercard have said to hell with that.

You don't screw Visa and Mastercard. THEY SCREW YOU.

Get in line with their rules or get out of biz. Period.

Back in '96, when my husband was in the biz, there was a big concern about whether the IPSP model was even "legal" so to speak ... and allowed under card association rules.

Obviously the IPSPs proceeded anyway, but the original "model" was always in question.

Now that the industry has really pissed them off, they're really cracking down with all of the rules --- including this one.

So, as usual, the industry only has itself to blame -- even on this one.

I'd bet Mastercard wouldn't be making that demand if billing practices were ethical and under control.

Try to think of it this way:

If an affiliate is cheating a sponsor program for a long time, what do they do?

They take all of the affiliate's money and tell them to go to hell.

If the sponsor could do more, they would throw the book at them.

That's all MC and Visa are doing.

It's the same type of stuff that's posted on this board day in and day out ... just on the other side.

Mastercard, like any large corporation, is a bureaucracy. So, in a lot of ways, their sketchy enforcement of various rules kinda makes sense. They probably didn't get around to a lot of things until it became a huge problem.

Second: Look at checks, just as an example. A lot of people, both online and offline, don't bother with it anymore because the bounced checks became too much of a hassle --- regardless of the money you could make.

Mastercard doesn't need us, and they obviously came to the conclusion that it's not worth the hassle. So they're taking the hard line: Get in line or Get Out.

Look at all of the discussions on this board. There's maybe a handful of webmasters who have expressed any interest in cleaning up the industry's billing practices.

The overall attitude of the vast majority is "f-ck the consumer 'til the end."

Would you want to process for these guys?

I wouldn't. So I can understand it.

I've already been accused of being a MC spy. If you had actually read the lawsuit (which you obviously haven't) it's pretty clear that MC doesn't give a flying f-ck about any of us, including Epoch. They won't even meet with them.

Maybe you haven't noticed but PayPal has cut off adult all together. Humboldt has cut off a lot of adult merchant accounts including Hughes, among others. WSB is out of business. Epoch's having cash flow problems.

Ibill and others have been fined as well. The list goes on and on.

We'll see who the "idiots" are when you're out of business.

It's a distinct possibility [that all adult processors will die].

I don't think IBill will die because Intercept has pretty deep pockets.

But I won't be surprized if Ibill dumps adult either. Intercept has stated they're going to work closely with MC and Visa, and that "high risk" adult processing is not a big priority for them.

As for the rest, who knows? I thought Epoch had some deep pockets but, with today's news, that may not be the case.

Unless there's a fundamental change in the industry's attitude toward billing --- which is highly unlikely --- yeah, they might all go under.

Especially if MC cuts them off, as they are threatening to do with Epoch.

Who cares about gyms [making it difficult to cancel]? Even if every gym on the planet is the biggest scammer on earth, what difference does it make?

We're in adult. They're not. They can probably get away with it. We can't.

You guys are going to be using the same old gym excuse to your dying day I guess ...

Whine, whine, whine ...

Gyms can scam ... why can't I?

Whine, whine, whine ...

And please don't try to tell me that porn sites are sooooo sqeaky clean on this .... Hah!

Indeed writes: Ok and if all cc processors go under, what will replace them in this industry? Checks payments?

Nevermind replies: There will be the overseas processors trying to dodge the rules, and that's already happening. I'm sure a lot of people will go with them until Visa and MC chase those operations down.

Someone on this board (I forget who) predicted that MC/Visa will eventually only approve processors where MC/Visa completely control the billing interfaces and such, leaving no discretion for third parties. I think that's a good possibility down the road.

Triple6 writes: Broke ass billing system would pretty much provoke chargebacks. I mean, damn, when I click "CANCEL", and I get an email that says it was 'cancelled'... I would expect that it was cancelled. Or am I asking too much?

Elephant_Gut writes: I find it ironic about all the negative posts against Verotel and Glo-bill recently, mostly rumor mongering. My Verotel and Glo-bill checks continue to arrive on time, like clockwork, knock on wood. Meanwhile, iBill, Epoch and Jettis all get fined up the wazoo and now Epoch is having 'cashflow' problems.

KimmyKim writes: You know what? It's crazy for me to even bother with a comment. Especially when I haven't read the rest of your nonsense, nor will I since by the time I get home from LA tomorrow it will be gone. And by the time I go to LA in a couple hours, no one will care.

But at the end of the day, it's a f-ck all shame that I have to come out and call you stupid.

Never_mind replies: Kimmy: I have three words for you.


That's the bottom line. Everything else is bullsh-t.

It's nice that you're still a loyal cheerleader, but maybe you should be looking for another job.

I hope for your sake that Epoch and Epassporte are truly seperate entities ....

At least in the cash flow department.

It might be "stupid" to count on these people for your future.

Call me what you like but I don't work for, much less blindly defend a company that has cash flow problems.

THAT would be stupid.


Chris Mallick, CEO of Epoch writes on GFY to Never_mind: I'm really behind on my reading today, so I may have to post again, but I agree with Nevermind on the above. And when I find out how you are, I am going to go after you for defamation and slander.

Your facts are for sh-t and your motives are becoming more clear every day.

Cindyff writes to Never_mind: Nevermind, why don't you give us some insight into you experience as a webmaster in the adult business or explain to us lowly beings your background in credit card processing. You are extremely opinionated yet for all we know you could be working in the local Burger King. Unless you have run adult websites, had to deal with members trying to rip you off. Processors like Ibill doing their best to damage webmasters profits or servers that have to run 24/7 without so much as 5 mins down time then really your comments mean little. Lets hear your experience of this industry ?

Epoch are without doubt the best processing company i have had the pleasure of dealing with, they are standing up for the webmaster and themselves and as far as i can see are the only ones doing so. Mastercard and Visa are imposing unfair trading practices on the adult industry as a whole, not just Epoch but all online processors a 1% chargeback rate is both ridiculous and unfair when compared to other industries that have 5% or more and do not face this sort of restrictive practice.

Nevermind you obviously have some sort of resentment to the adult industry and your biased against it is very plain to see, you jump at any chance to put it down and are the voice of doom and gloom every time a tit bit of news is released. Unless you can openly tell us here at GFY what your involvement is in the adult industry i for one will consider you posts the ravings of some ill informed person who has some private vendetta against sex on the internet and treat you posts with the disdain they deserve.

Cris, Clay, Rand, Amparo you are great people thank you for taking a professional stand on these issues and thank you for keeping us the webmasters informed, i am behind you 100%

More later, maybe...

Never-mind writes on GFY: What you guys are really pissed about is that I actually read the lawsuit, and have been pointing out the facts as outlined in that lawsuit.

If you don't like someone pointing out the details Chris --- and you were expecting some blind cheerleading mantra, well --- you probably shouldn't have posted it in the first place.

PornDollar, you obviously haven't read the lawsuit. It might help if you did.


And BTW Chris, You might want to consult a lawyer on the actual legal definition of slander. You don't even come close with your ridiculous threats.

You can't "slander" someone if you base your opinions on facts, which is exactly what I've done.

I could go through all of the page citations again, but I've already done that on other threads.

Are you now disputing the following facts as outlined in the lawsuit?

* Epoch violated MC's 1 percent chargeback rule for eight months in 2001-2002, a good year and a half after MC implemented the 1 percent rule.

* Epoch says there was other data showing chargeback violations after that, but Epoch says it was reported to MC in error.

* MC says Epoch has violated other rules by issuing too many refunds "in lieu" of chargebacks.

* MC has imposed substantial punitive fines, and is currently fining Epoch $2,500 a day --- demanding they restructure their entire business, or they will cut them off.

* MC accounts for 40 percent of Epoch's revenues, so if MC cuts them off, it could worsen the above mentioned cash flow problem.

Where are the false allegations and claims?

I've expressed opinions based upon the above mentioned facts, as is my right.

If you don't like it, hike it.

I've criticized all of the processors. Epoch just happens to stand out for a few reasons.

They're more active with their PR efforts on this board, always making statements about how supposedly great they are.

I didn't see it that way. When I posted evidence to the contrary, they got pissed.

Their attitude is that you must completely tow the company line, or you must be an MC spy, a disgruntled competitor, or whatever.

Then they start making threats, and offering bounties. It's ridiculous.

If Epoch had said: Look, we screwed up. We're going to make amends with MC and fix this problem. We're going to clean up our billing practices.

I probably wouldn't have said anything. Hell, I would have applauded them.

Instead it's: We're the almighty Epoch. We know everything. We're the victims here. It's all MC's fault. Our sleazy billing practices have nothing to do with our cash flow problems.

So .... I just take issue with their arrogance.

Epoch Responds


Fred writes: Luke - fascinating story is developing with one well-known but not very well-liked online credit card and check processor. Seems that Paycom/Epoch owes RJB Telcom over 2.5 million dollars in reserves and actual sales. These are sales as recently as Oct, Nov and Dec of 2000. Reserves go back until 1999 I am told. As you may or may not remember, Paycom/Epoch is the company that shut RJB's check processing off at their time of greatest need, in Novemeber 2000 when the FTC had come in. Even though there were no accusations of check fraud, Paycom/Epoch decided to shut them down. Rumor has it that they made RJB sign a "hold harmless" agreement in order to turn their check processing back on. Literally held a gun to their head a second time when RJB's backs were against the wall. And I have been told by more than one source that they KNEW about the FTC action weeks before it came down. Not hard to believe.

Since that time RJB has moved their check processing to CCBill. Others would be wise to follow the leader.

Back in January of 2000, Paycom/Epoch let their webmasters know that they were passing on Visa fines and fees that they incurred during 1999. This caused webmasters to pay Paycom/Epoch in excess of 10 million dollars. Up until this time they have provided little proof as to how those fines were calculated. Many seriously doubt that the fines were of that amount and not many webmasters questioned it. In fact, many believe that it was Paycom/Epoch's f---ed up customer service that led to these problems. Looks like the FTC should be looking in that direction. Maybe they will be next?

Well Luke, it is about to happen again...

Paycom/Epoch is behind in payments to webmasters for the third or fourth time in the past 2 years. They are losing new banking relationships every day. They have been shut down by Lloyds of London and more recently Amtrade Bank to name a few.

The company is being run by an egomaniac that is raping his own company and heading them down the path of disaster at the expense of the webmasters. Every webmaster on board with Paycom/Epoch is about to go down shortly. I advise these people to get their databases and get out. Time is growing short.

I also understand that a class action lawsuit by a certain group of webmasters is about to be unleashed on them. Hard to believe that there will be anything to attach to other than the principle's personal assets. I will know more in a few days.

Rich Botto from RJB Telcom tells to Luke: "It's no secret that Epoch owes us a ton of cash...Also no secret that they weren't exactly a "friend" during the FTC situation."


Clay Andrews at Epoch, one of the porn web's leading credit card processors, writes: Luke, Although we intend to respond more fully to the false comments posted in your article, you promised a retraction of anything that you posted which was not true. Therefore, in response to your request for details, and setting aside the irrelevant personal comments made in the "Epoch Owes RJB 'A Ton of Cash'" article, we demand a retraction regarding the following:

1) "Epoch owes RJB Telcom over 2.5 million dollars" -- while we will NOT discuss the amount which may be due to/from RJB Telcom (or any other webmaster at any other time) because such issues are private matters which do not belong in such a public forum, suffice it to say that we do not believe the number at issue as to RJB to be anywhere near that much.

2) Regarding Epoch's response to the action taken by the FTC -- the source of RJB's financial problems was their inability to process credit cards, not checks; Epoch took the prudent steps necessary to protect its other check processing clients in light of the substantial risks created by RJB's situation.

3) Epoch had absolutely no indication that the FTC was planning to or even considering taking any action against RJB until after the Federal Receiver was appointed.

4) Epoch did pass through a PORTION of the fines assessed by Visa in the first half of 1999, predominantly caused by reseller fraud and has long since been corrected. The portion passed through was nowhere near the $10 million figure cited in the article and was only passed through to webmasters who exceeded Visa's chargeback guidelines.

5) Epoch is not subject to any new fines, is not even subject to any chargeback monitoring program, and there are no new fines or fees to be passed through to Epoch's clients.

6) Epoch was not "shut down" by Amtrade; Amtrade lost the ability to accept the volume of business coming from Epoch -- the problem was Amtrade's, not Epoch's.

7) Epoch was not "shut down" by Lloyd's of London -- Epoch has never had a bank account at Lloyd's. The truth is, although a syndicate which purportedly somehow includes Lloyd's has refused to pay for millions and millions of dollars of transactions sent to them, Epoch long ago absorbed the more than $15 million loss and has, nonetheless, paid its webmasters for those transactions.

8) Epoch is NOT "about to go down."

Although some people may think it "cool" or "funny" to post falsehoods about Epoch or others involved in the on-line industry, the truth is that such inaccurate reporting is simply irresponsible. We renew our demand that the falsehoods in the "Epoch Owes RJB 'A Ton of Cash'" article be retracted immediately."

Luke responds: I retract all falsehoods in the original posting. I take it that Epoch says it had no foreknowledge of the FTC's bust of RJBT. I now understand that Epoch says it did not pass on ten million dollars in Visa fines to webmasters, and only passed on fines to those webmasters who exceeded Visa's chargeback guidelines. I now understand accept that Epoch believes that it is not subject to any new fines. That Epoch was not "shut down" by Amtrade or Lloyds of London.

Luke sincerely regrets all errors and hopes that this retraction undoes any damage my publishing of the initial article might have done to Epoch/Paycom and its leaders.

Fred, the guy who got me in trouble yesterday, replies to Luke about Epoch's points: "Epoch's failure to process checks during a period of credit card fraud investigation indicated only one thing. A chance to use leverage against RJB so that they would not get sued for millions. It's common knowledge that the FTC gave Epoch it's blessing to process checks, yet the scumbags would not do so until weeks later and not without a free pass on potential damages. Deny that Mr. Andrews. And while you are at it, explain in your own words how shutting RJB down protects your other clients?"

Luke also received this statement from Daniel Steinberg, the founder of Epoch:

To Luke F-rd From Epoch Transaction Services:

We don't normally respond to rumors on the boards. But you've stepped way over the line on this one, and publishing "Fred's" statements without contacting us first, was very irresponsible on your part. Thus, we will address some of "Fred's" remarks and/or your personal comments that we believe simply came out of RJB's camp.

We are in negotiations with the Botto's on payouts for ACH and reserves. We are within our contractual rights with the approach we have taken to their account, and we feel strongly that when it is concluded all parties will be satisfied with the result. We have always been a fair and responsible player in the industry and this is one reason why so many of the major companies have remained loyal to Epoch. We have built up a lot of trust over the last five years with people we know well and care about. Thousands of sites use our services and our clients know how hard we work for them.

The comment that we knew about the FTC coming in to take over RJB's business well beforehand is preposterous and totally untrue. Also, Bob Botto knows that we were very sympathetic to their problems. However, under advice of counsel, and after carefully reviewing our agreement with our ACH bank, it was clear that our ability to maintain our account standing with our ACH bank could be in jeopardy because of RJB's problem. We were NOT going to risk our ability to take care of all of our other client's check business. We suspended RJB's checking, accordingly. To this day, our ACH bank is glad that we did. This is a fact. And privately, most of our big clients applauded the fact that we took steps to protect them. ACH was a very small part of RJB's business and to this day, is not the source of their problems. A few weeks ago, through another "friendly" post, RJB implied that Epoch's suspension of their check processing had the biggest impact on their inability to pay their webmasters. It's pretty obvious that was not the case. Epoch was only their check processor at the time; the majority of any webmaster's business comes from credit cards and Epoch has not been their credit card processor for well over a year now - long before their FTC problem arose. RJB also implied in that post that we had not paid them on their ACH business for a month prior to their FTC injunction. That was a completely false statement. We had in fact, been paying them current on their check business right up until the FTC action against them. This fact was pointed out to the Botto's and they have yet to publicly correct that misstatement.

We are sorry that they have had so many problems, and hope they pull out of them. We know that a lot of webmasters around the industry have made a lot of money with RJB. We were clearly not responsible for putting their "backs against the wall." Our job was to do the most responsible thing for all of our clients. That's what we did.

Your post also implied that Epoch had major problems on the horizon. Epoch has no chargeback problems in its credit card processing accounts and we are extremely upset that you falsely implied that we do. There are NO fines to pass on to any of our clients. Our accounts are NOT in any monitoring program. These are the facts. Epoch has already gone through the learning curve that a lot of the newer processors are painfully experiencing right now. Epoch has strong financial relationships in place and continues to be a major contributor to this industry. We have an excellent relationship with VISA and NO regulatory involvement whatsoever. RJB's status with VISA and the FTC is their business. We don't speculate publicly and you shouldn't either. Again, all we did was act to protect our business and our webmasters' businesses, which is what good business is all about.

As stated above, we have acted within our contractual rights to protect our company from trailing returns, refunds, chargebacks, and fines. We acknowledge money is owed to RJB and are responsibly resolving this with them in a way that protects our business. That's the way it has to be. The rumor mill isn't going to change that. And irresponsible posting is dangerous. Be advised that we will chalk this one up to inexperience, but the next time you think you have some important information to share about Epoch, you better talk to us first. Posting such inaccurate statements without first seeking to verify their truth is simply irresponsible. One factual point that you did make was that the FTC did not focus on RJB's check processing through Epoch. That should tell you something about Epoch. We have a solid product that thousands of sites have used successfully for years, including many of the major sites and companies in the industry. One final comment: although some may think making unsupported public statements will intimidate others, we know that posting wars that take disputes to the public forum do not help anyone in this industry, one of the most watched-over on the internet. Therefore, we won't respond further to this subject on any board, but we urge any Epoch client who may have a question on any of this to contact us directly.

Paycom.net, Inc. Secure Real-Time Credit Card & Check Processing http://www.paycom.net http://www.epochsystems.com 4215 Glencoe Ave, 1st Floor Marina del Rey, CA 90292 888.627.3888 (TOLL FREE) 310.827.5880 (LOCAL) 310.827.5519 (FAX)

Luke received this from Jason: The problems are more with the porn sites not the processor... epoch got in problems because they went from medium business to high volume business in almost no time. Now alot of business have moved to other processors who will have more problems in the future than Epoch. Epoch are getting their act together, and they will survive. Alot of sites who have moved to other processors from Epoch are having problems with signups ratio etc. because those processors are facing the same problems Epoch did 1-2 years ago, if these "new" processors are strong enough to survive in the processing business, well.... time will tell. Epoch are getting their act together and these rumours have been startet by some frustrated small time people, but I guess thats how rumours start in most industries.

Luke received this from D. Steinberg at Epoch: He [Clay Andrews] is the founder and President. My name is not David and I've never been convicted of wire fraud. Geez, you are really amazing with this rumor stuff!

CEN has always been with Epoch. You should drop JB an email and ask him about us. We have always done VM's scrubbing and continue to this day. Drop Paul Lesser an email and ask him (Ron's partner). Ask Python, ask IGallery, ask Rhino, ask Oz, ask Mike Price. They have all been with us for years and know how hard we work for everyone. RJB left to go to Jettis a year and a half ago with their cc processing. Jettis principals also owned a company that was RJB's biggest reseller. It was a good fit for RJB when Jettis opened their doors. There were no hard feelings when they made that decision. Yes, Epoch has had some late payments The only problem we've had in the last year and a half is as a result of the "Lloyds" merchant banking deal. We have recovered from that almost completely, and have very solid banking again going forward.

Oz writes Luke: I've been with Epoch since 1997 and I still support them 100%, despite the painful events of the past. Epoch has made good on their promises to my company (TrueCash.com), and they've done a satisfactory job in making on-time payouts since the "Black Winter" of last year. I believe Epoch has weathered the storm. More importantly, they are preparing for the future. They have structured excellent banking arrangements and relationships. Much of what really goes on in the processing world is kept behind closed doors and will never see the light of day at l-keford.com. Therefore, take what you hear about Epoch with a grain of salt. Most of the negative publicity I've read has been utter fabrication.

RJB Telcom Responds To Epoch

Bob Botto writes: Let me start by saying this will be brief as we are in negotiations with Epoch.

Daniel Steinberg's accusations of the comments coming from the RJB camp is senile dementia setting in. Nice try Daniel.

Daniel Steinberg's remark "Also, Bob Botto knows that we were very sympathetic to their problems" could not be further from the truth. In my opinion, Epoch was never sympathetic. Deep inside Daniel may have felt sympathetic towards us but as we found out he has no say at Epoch. Nothing personal as Daniel means well.

Oh, and Daniel was so sympathetic that he lied to us about turning ACH [check processing] back on! If bullshit were electricity Daniel, then ...well...let's say California wouldn't have any power problems till the end of time.

"We suspended RJB's checking, accordingly. To this day, our ACH bank is glad that we did." (shut them off). But Daniel, they were also OK with turning us back on for several weeks after that. So which was it? Were they happy or sad? And how did you protect the other clients by shutting us down?

"RJB also implied in that post that we had not paid them on their ACH business for a month prior to their FTC injunction". Last payout we received before the FTC was for the first week of October. Let me correct that, last payout we received was for the first week of October.

"Jettis principals also owned a company that was RJB's biggest reseller." Inaccurate.

Now as for Fred....he is close to on the money on the amount of $$, on the money with us getting a letter from the FTC giving Epoch clearance to process checks and them refusing, on the money with the statement about "holding the gun to their heads" and the legal terms described. As for everything else I have no idea and therefore cannot comment on it.

If Daniel would send the money he rightfully owes us, I wouldn't have to be summoned here to respond to the book that you wrote.

XXX says: If RJBT has been a victim of rogue webmasters, as alleged in the FTC case against RJBT, wouldn't RJBT go after some of these rogue webmasters? Has RJBT sued any of them?

Yanky writes: Luke I make 10 sales every day, have done so for over 4 years now. After 4 months to allow the recurring to level out, Epoch pays me a consistent $2,500 per week on 10 sales per day, with a 1% chargeback rate. After 4 months to allow the recurring to level out, CCBill pays me a consistent $950 per week on the same 10 sales per day, with a near zero chargeback rate.

Clearly, Epoch is playing much closer to the fire than CCBill is, but the payback is very good. They pay me twice what CCBill does. Will I take the risk that Epoch will f--- up and go down? Absolutely. Even if I knew they'd go under at the end of the year, I'd still rather process with Epoch for a year than process with CCBill for 2 years. But I don't think they're going anywhere. They're smart. Smart enough to play close to the fire, pay me twice as much, and still keep chargebacks down to acceptable levels.

Another Epoch story: One of my affiliates told me that he still has 30 members on Epoch even though he hasn't processed with them for 12 months. He also has 30 CCBill members, but that's after sending all his traffic to them for the past 12 months! Give me Epoch any day.

Frank writes: Luke, keep this anon, but my understanding is that CEN was suing the f--- out of epoch as well. Ask Steinberg to explain in simple english why every other billing processor can get checks out on time and pay back all reserves but epoch can't. The new contracts they're trying to force you to sign are simple robbery, and I would be happy to fax you a copy. They want to give you back a portion of your reserves spread over a period of three months in exchange for signing this piece of shit, which is basically just a giant indemnification for Epoch about paying the rest of your reserve. You have to give up the right to sue for your money in order to get ANY of the money they owe you. I told them to stick it up their ass and pay me. I suspect that the reason they're so far behind in getting out their regular payments is so that webmasters will be hard up enough for cash that they HAVE to sign the contract.

I'm going to sue the shit out of epoch as soon as I find an attorney to take the case. Every time I talk to any well known web savvy attorney they've already done work for epoch and it would be a conflict of interest. I hear they're all driving Ferraris with webmaster money...

Why So Many Retractions?

Devoto writes: Luke, Can you please explain to me why it is that so much of your site does NOT contain gossip (as the flesh-peddlers would have you believe) but rather, it contains MANY, MANY demands for retractions. For every one line of "gossip" your site contains, there are five lines of "proof" offered by the so-called VICTIM of the gossip to prove otherwise. Take, for example, this Epoch situation. Someone states they believe they are "going under" and WHAM, your site is inundated with arguments "proving" otherwise. There are COUNTLESS other examples that appear on your site under this category. Could it be the case that they are PROTESTING too MUCH? If the rumors are so outlandish and preposterous, why would one need to DIGNIFY them with a response? Perhaps, as flesh peddlers they feel the need to CLING to the last bastion of self-worth that they have? OR is it simply that YOUR SITE, Luke, is VERY influential in the adult industry?

Epoch's Daniel Steinberg

XXX writes: Who knows who owns Epoch... But there's a Daniel Steinberg there. What's his role? Read this:

From the Los Angeles Times, Wednesday, June 30, 1993:

6,000 Lost Millions With Fiberline Deal


Brokers Investment Corp. was terrific at raising money. What the Securities and Exchange Commission would like to know is what happened to it all.

From 1989 to mid-1992, the Woodland Hills company's high-pressure salesmen raised $109 million by reading scripts on cold calls made to thousands of investors from coast to coast, the SEC said. Investors were lured with talk of potential profits of up to 32% a year from deals in telecommunications, fiber optics and automated teller machines.

Some 6,000 people put up their money. It was supposed to go into deals set up by an obscure telecommunications outfit in San Diego called U.S. Fiberline Communications that was linked with Brokers Investment. But if the SEC's allegations are right, at least $40 million was either pocketed for personal use by top officers of Brokers Investment and Fiberline, diverted for unrelated businesses or used as part of a fraudulent Ponzi scheme--in which money raised from new investors is used to pay off previous investors.

According to the SEC, this happened after a hefty 30% of the $109 million was taken out for commissions and fees to Brokers Investment and its principal executives, some of it illegally. In April, the commission filed a civil complaint in federal court in Los Angeles against Brokers Investment and Fiberline.

"It was one of the state's biggest boiler room operations in recent years," said Stan Maekawa, an assistant SEC regional administrator in Los Angeles.

The complaint forced Brokers Investment to shut down. Its co-owners, Norman Shubert and Daniel Steinberg, signed a consent order in May, without admitting or denying guilt, that prohibits them from selling unregistered securities and committing securities fraud. Meanwhile, three principal officers of Fiberline--William Grant, Scott Nauert and L. Scott Noreuil--resigned from the company, and each signed a similar consent order. They, Shubert and Steinberg declined to comment for this story. But their attorneys said they will be vindicated once a thorough investigation is completed.

[I]n the mid-1980s Steinberg, of Brokers Investment, and Grant, of Fiberline, were censured for selling unregistered oil and gas securities in separate cases. Steinberg was disciplined by regulators in Wisconsin and California, while Grant was censured in Wisconsin and Alabama.

Jeff Miller from SunupMedia.com writes on Netpond: Daniel Steinberg..... Who is it that you think you are fooling??? Your response to Luke F-rd is a joke. I thank god I saw you guys for what you really are and dropped you like a bad habit 2 1/2 years ago. How dare you come on here and spew your lies and deceipt. The people you owe money to are intelligent webmasters Dan, not old ladies whose pension fund you are ripping off. Go ahead, have your CEO threaten to sue me again. Funny how I never heard from your lawyers. Obviously your lawyers told you that they couldn't sue me for slander and liable since I had the greatest defense of all, THE TRUTH. Visa fines, PLEASE. Where was the evidence of such fines Dan? Have you ever produced the evidence to anyone? Why can't you pay people what you owe them??? Here Dan, let me help you...

1. Customer pays

2. You collect money

3. You take out your percentage

4. You pay the webmaster their percentage. Dan, can you explain to the world what is getting f---ed up between steps 3 and 4??? How is it that you cannot pay out the webmasters PERCENTAGE Dan??? It is not like they are asking to be paid 150%, or 120%, hell, they don't even get 100%.... what is going wrong between steps 3 and 4?

Anne Marie from Pussyf---files.com writes Netpond: Of course Epoch is not going to go down. Since Epoch is not paying out on millions in reserves that they no longer have any legitimate justification to withhold, and are the slowest paying payment processor in the business, and the only one that will just up and not pay for however long they feel like it, they enjoy excellent cashflow. Too bad it is not shared... 2 years, 5 months, 6 days with no payout on my reserves... Enough said...


KBDumbPhuck writes: Luke, Here is the nail in Epoch's coffin. All that BS they posted about things being fine etc.. Now they are saying they wont be paying out for about 45 days. This just about drives the nail in thier coffin. Sincerly, KBDumbf---

Here is the mail attached:

Hello everyone, My apologies for not mailing the post's out on Monday and yesterday. In fact, I was not in the office at all Monday, but I'm feeling much better now. Especially now that I feel like I'm getting caught up! And speaking of catching up, payments will soon be catching up as well. Epoch will soon return to the normal two week disbursement. We have every reason to believe that this will happen within the next 45 days if not sooner. We appreciate your patience and understanding while we all pulled through this delay. The new options available to us due to our new arrangements will be very exciting and the latest, greatest, and newest features will be announced as soon as we can throw the switch.

I've included the Wednesday announcement below as well as the posts that should have gone out Monday and Tuesday. If you have any questions, please drop me a line. Now go read the posts! Happy Valentines Day! ---Rand at EPOCH


From http://www.babes4free.com/submit.htm:

ATTENTION ALL EPOCH / PAYCOM USERS! I have used Epoch / Paycom in the past (starting mid 1999) for my paysite transaction services and during the first six months they were ok. Then when it became time to start returning my so-called 'reserve' they started coming up with excuses and to date they owe me a large five figure sum. I stopped using them in January 2000 because of their suspicious behaviour and because I was warned that they were allegedly known for their dodgy dealings. I was also warned that they would allegedly start playing games if I dropped them as my main processor. Soon after dropping them, I started getting a massive number of chargebacks and charged $12 for each one which usually meant my payment check was more than halved. I even missed a few payment checks because they charged so much that there was no money left to pay out. I remember one webmaster telling me that at one IA show virtually nobody went to their stand due to their alleged reputation. Now Epoch / Paycom are charging me $22 to print every payment check (minus the reserve still). My experience with Epoch / Paycom has proved to me that I can not trust them and that I will never use any sponsorship program which uses their services. You can draw your own conclusions.