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Kevin Smith

Virtual Poker Room Operator Seeks Payment from Processor

27 October 2000

Less than six months into their run in the online gaming sector, officials with PSI Corp. have learned a valuable lesson. And they learned it the hard way.

The company, which owns and operates, an interactive real-time site which features poker tournaments and poker tables, is out over $160,000 after problems with its credit card processor.

Officials with the company say that more than two months ago, they realized a wire transfer of funds had been missed by e Payment Solutions (ePS), a UK based firm signed to handle all of PSI's credit card transactions. They made some calls to ePS and were told that the transfer would be traced and that the process would take a few weeks.

As more time passed, more wire transfers started to be missed.

"We should have switched, or at least gotten another firm to handle our account right after they missed that first one," a spokesperson for PSI said. "We were naïve about all of this and just had one firm doing it from the start. We probably should have had more from the get go to have something to fall back on."

PSI officials say they continued to get explanations from ePS officials on why there were so many problems. While the excuses were many, the money was no where to be found.

"We were listening to their stories and not paying attention to what they were doing to fix the situation," the PSI spokesperson said.

As more time got passed, and PSI found itself deeper in the hole, the company began doing some investigating on its own. They talked to other ePS clients--it is believed the firm has over 200 of them--and quickly learned they weren't the only ones who were having problems.

American Fraud Watch Services, Inc., one of ePS's creditors, filed a law suit in London's High Court of Justice (Chandery Division) to seek retributions from ePS. It is believed that American Fraud Watch was out over $5 million. A counter suite was then filed by ePS against American Fraud Watch. Officials from PSI were going to get into the initial suite, but when they learned of the counter suite they thought better of the idea.

"We may never see this money that we are out of," PSI said. "If we would have gotten involved in the suite, are chances would have been even slimmer of seeing a resolution."

PSI was fortunate that the debacle with ePS, didn't put them out of business. The company was able to secure some shot-term financing, and had enough startup capital to get it through the hard times.

"We got the short-term financing and that secured our survival," PSI said. "We are still struggling right now, but we hope we have got through the worst part of everything."

PSI didn't get in on the American Fraud Watch Services suit, but they did threaten ePS with a suit of their own. While the suit hasn't been filed, and officials say it probably won't be, they still have yet to recover any of their money.

PSI says that, in the meantime, ePS is trying to smooth things over with its clients. Earlier this month, October 5, ePS sent out a letter to its clients. The letter, addressed by Anthony Brown, puts the blame on ePS's bank. The letter states that ePS, which was using the Bank of St. Kitts and its processing arm, Databank. EPS, claimed in the letter that Databank was "very delayed reporting chargebacks."

The letter went on to let merchants know that payments would continue to be made out of ePS's own account and encourages its clients to find a temporary means of payment.

But claims no payments were ever made to it or its players by Databank or ePS's own account.

Officials with both ePS and Databank didn't return numerous attempts to reach them for comment on the issue. American Fraud Watch Services was unavailable for comment as well.

Meanwhile, a site that is in its infancy, is struggling with trying to gain back the many users it picked up during the last two months--a period in which things were starting to pick up for the site. The company started to see usage after the launch of its poker tournament software, which is used, on the site. "This couldn't have come at a worse time for us," the spokesperson added said. "We had a couple successful tournaments and things were heading in the right direction."

In the meantime, PSI has learned a valuable lesson and now has advice to other operators.

"Actions speak louder than words," the spokesperson said. "We dug ourselves into a hole because we kept giving them more chances. We cut them too much slack and we didn't have a back up plan. We know have about five backup plans so this won't happen again."

Virtual Poker Room Operator Seeks Payment from Processor is republished from
Kevin Smith
Kevin Smith