Warning to Velocity Merchant Service Customers

[Carl-CSNM]

Hi everyone,

For the last few weeks we have been unable to get in touch with Velocity Pay Merchant Services, and half the management system has been broken.

This afternoon we were informed Velocity Merchant Services are going into receivership and police are involved with them due to fraudulent activity. Any rolling reserve you have is safe with Deutsche bank and you will get it back when everything dies down. In the mean time we have been advised to get a replacement payment processor as the system may go off any day.

Velocity have been told they cannot communicate with customers until police activity has ceased.

So anyone planning on signing up or using Velocity Pay Merchant Services as a payment method I suggest you remove it asap.. :(

[vigo]

Wow that's terrible. Thanks for the warning, Carl.

[Carl-CSNM]

No problem, but actually my post is slighty mis-leading, it was one of their customers a fake web company selling flights and holidays taking payments through velocity and then never coming up with the goods. And because Velocity's Insurance didnt cover that sort of liability, they have no fall back. They are liable for £5m in damages so I've been told.

The 5 people who were behind the fake company have been arrested. :)

It's a shame as the support and service has been great. :(

[Cornish Steve]

And because Velocity's Insurance didnt cover that sort of liability, they have no fall back. They are liable for £5m in damages so I've been told.
This is a really important business lesson. It's why eBay, when they started out, carefully avoided acting as an intermediary but instead performed the role of broker. That way, if someone sold something illegal or faulty, they could not be held responsible. This principle was tested early on in the law courts, and eBay survived because of their approach. When putting together a business plan, it's imperative that we always consider potential liability scenarios and build a business model that avoids situations like the one faced now by Velocity.

[Carl-CSNM]

Velocity Merchant Services have release an official statement:

It is with great regret that I must inform you that Velocity has ceased trading and will shortly enter into insolvency proceedings. During the summer of 2006 Velocity was contacted by the Met Police with regards to two Merchants on our books who were alleged to be selling non-existent holidays.

A Met Police briefing can be found at: http://www.met.police.uk/fraudalert/news/holiday_website_fraud_08_11_06.htm.

Due to the size of the fraud Velocity is simply not able to refund all the amounts requested by consumers under the chargeback scheme.

All attempts have been made to find a solution but there simply is not one at this stage. The payment systems will be kept running for as long as we can legally run them in order to give you as much time as possible to find a solution.

The phones at the Teddington Office will not be answered from this point on.

A notice will be published once the courts have appointed an Insolvency Practitioner.

Yours,
Velocity Support

[Carl-CSNM]

Email from Pago the people in charge of the processing and merchant account:

Dear Ladies and Gentlemen,

You have entered into a merchant contract for card acceptance in the card-not-present business (CNP contract), including our contractual conditions for Mastercard and VISA credit card accep-tance and an assignment for the satisfaction of third party claims, with Velocity IT, Ltd., London (subsequently referred to as Velocity) as well as with the Deutsche Bank AG, Frankfurt and Pago (both jointly hereinafter referred to as “Operators”).

The management of your sales partner company, Velocity, through which you are connected to the card payment networks, has informed us that the firm Velocity is insolvent and will cease opera-tions. Velocity should also have informed you of this in an e-mail today. We will therefore, due the situation of Velocity, exercise our contractual right to extraordinary terminate, at short notice, our contract with Velocity, effective as of Friday, 12th January 2007, 23:59, CET

We wish to inform explicitly that, upon termination of our contractual relationship with Velocity, the above mentioned CNP contract concluded with you, automatically becomes ineffective (Paragraph 16.5. of the contractual conditions for Mastercard - / Visa credit card acceptance in the card-not-present business) and the Operators reserve their right to additionally terminate the CNP contract between you, Velocity, Deutsche Bank AG and us for good cause. Transactions will no longer be accepted from that point in time.

The balance of your rolling reserves will, in accordance with the contractual agreement, be paid to you after expiry of the contractually agreed security reserve period (paragraph 8 of the CNP con-tract). This period is generally nine months, can however be longer in individual agreements.

Velocity has simultaneously informed us that a third party has obtained access to the systems of Velocity and possibly has access to your customer data. Our lawyers are currently investigating the possibility of initiating criminal action. We request you to take measures to avoid misuse of the data for the remaining period of the contract. In this context you are requested to inform us imme-diately of all firms you use to send transaction data under your contract to our systems and of the steps you have taken to fulfil your contractual duty to observe the card scheme regulations as well as to use only the approved and agreed data transmission channels.

Velocity was, as your chosen sales partner, responsible to you for the availability of a technical system, approved by us in accordance with the card scheme regulations, which enabled the transmission of transactions to us.

We would be pleased, should you also in future be interested in being connected through Pago/Deutsche Bank to credit card networks via a sales partner, to aid you by referring you to another such UK based partner. Here we can name:

Metacharge Ltd.
Tower Bridge Business Centre
46-48 East Smithfield
London E1W 1AW

At Metacharge Ltd. a special telephone and mail address have been activated for customers of Velocity:

E-Mail: fasttrack@metacharge.com
Telephone: 0870 6260862

:(

[Cornish Steve]

Let me translate that into non-legal English.

1) You're screwed.
2) You won't see your money for almost a year.
3) Someone may have stolen your bank account information.
4) We're not responsible and we're sticking to the contractual fine print.
5) Can we recommend another company similar to the other one?

I guess they are trying to help, but lawyers (sorry Jonathan and Antonia) compose such impersonal and heartless statements.

[nethosts]

Let me translate that into non-legal English.

1) You're screwed.
2) You won't see your money for almost a year.
3) Someone may have stolen your bank account information.
4) We're not responsible and we're sticking to the contractual fine print.
5) Can we recommend another company similar to the other one?

I guess they are trying to help, but lawyers (sorry Jonathan and Antonia) compose such impersonal and heartless statements.
That about sums it all up perfectly.

[Secpay]

Dear all,

We're sorry to hear that some of you are having difficulties finding a quick solution for you and your customers.

We would like to offer you all our help in any way we can. If you already have a merchant account and need a gateway, we may be able to help you find a quick resolution. We are open to discuss short term commercials.

If you do not have a merchant account, we are in discussions with a few acquirers to help any enquires move forward quickly.

We hope there is minimum disruption to your business, and wish you all the best.

Secpay 08701 904136

[Carl-CSNM]

It seems despite Pago's reassuring emails/faxes we are now getting short changed on our payments from them! :mad: