WRX: Who will take action on NETeller's breach of contract?

[WRX]

Repeating my comments posted on other sites.
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As everyone knows by now, NETeller has e-mailed U.S. customers, saying that the company would now accept withdrawal requests. Now, an interesting twist is that when you go to the withdrawal screen, you will be presented with a form of release, asking you to give up any claims against NETeller. This would most obviously apply to interest NETeller owes you for the delay in payment, and any other damages you might claim because of the delay. As we're all used to seeing when installing software and so forth, you're presented with two radio button choices, "I agree," and, "I don't agree." You would predict that NETeller might simply refuse to pay you if you didn't agree to the release. But it turns out that if you click, "I don't agree," the Web site will go ahead and process your withdrawal. A very recent addition to the information on the Web site, if you look for it, informs you that you do not need to agree to the release in order to receive payment.
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To the company's credit, NETeller has been making speedy payments by EFT to customers' bank accounts.
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Nevertheless, I was offended by this one last sleazy trick by a company that, at crunch time, many of us felt did not give the interests of its customers the highest priority. They weren't going to be as brazen as to refuse to pay people unless they knuckled under to a gratuitous release of claims. But they try to fool you into thinking that they won't send you money unless you agree to the release. I bet that they get off the hook with a few million customers this way. But don't you fall for it!
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(Probably won't work, actually, because it's too misleading. Customers don't get any benefit from the "mutual" releases. I'm not aware that NETeller have some theory under which it thinks thousands or millions of their customers might owe them money.)
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Which brings me to another point. NETeller sat on our money for about seven months and counting. The laws of probably every state and every nation that respects private property give a creditor the right to recover interest on a debt that is not paid on time. NETeller posted a statement on its Web site several months ago saying, "In accordance with NETELLER's Terms of Use, no interest on account balances will be paid." Of course, this ignores the fact that NETeller breached its own Terms of Use by refusing to pay its customers their funds promptly! I don't care that the U.S. government strongarmed NETeller into not paying people. That's not a legal excuse. If some other terrorist state had held NETeller's friends hostage, we wouldn't consider that an adequate reason for the company failing to honor its obligations to millions of customers. Add to that the fact that NETeller has been collecting interest on our funds while they've been sitting in the company's bank accounts.
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What I am hoping is that someone will step up to the plate and take combined legal action on behalf of all U.S. customers to collect the interest we're owed. It's a big sum, in the aggregate. Maybe it's to the point that U.S. courts can no longer function independently, and at the government's bidding will refuse to enforce this obligation. So maybe a domestic class action would not be effective. But I hope that some large law firm may take an interest in this matter, and if need be bring suit in a more civilized country. NETeller is based in the United Kingdom, and does substantial business in much of the European Union, so it could be vulnerable in a number of jurisdictions.
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Now it's true that a lot of big law firms aren't tempted to take a case unless they think they can make tens of millions in fees. But there are still lawyers who are trying to make a more modest living, and would happily take on an apparently easy case with likely damages of a few million dollars. There is definitely a syndrome of lawyers handling class actions looking out for no one but themselves, and that's a problem. So many times the courts approve settlements that pay millions in fees to the plaintiffs' attorneys, and that give the class members worthless coupons and the like. But this is a case of real, tangible, quantifiable losses, and the mechanics of NETeller making additional payments to its customers would be very simple.
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Any takers?

[MGP]

It's people like you that raise prices for everyone in this country. Tell me where and I'll send you the 50c you're whining about.

[Norm Wattenberger]

After what they went through at the hands of our gov't; I have a hard time seeing them as the enemy.

[Parker]

Most of the people I know who had funds on deposit with Neteller had either written the money off, or at best did not expect to see it for a long, long time. Needless to say, they are overjoyed to get their principal back. I don't think that you will find much enthusiasm for going after Neteller in order to (possibly) recover a few dollars of interest.

[WRX]

<< It's people like you that raise prices for everyone in this country. Tell me where and I'll send you the 50c you're whining about. >>

MGP, that's just unnecessarily nasty. I don't consider it unreasonable to ask people to pay their debts, and to ask for interest if they don't pay on time. Might not one conclude that people not honoring their promises had a part in raising prices? As for the 50c you think I'm out, multiply that by a few hundred. Does your offer still stand?

[WRX]

Norm, I realize that NETeller was put in a difficult spot by the federal government grabbing a big piece of the company's funds, but like I said before, arbitrary and illegal action by one government isn't a reason for letting the company off the hook for its obligations to customers. NETeller could have simply mailed its customers checks out of its other funds, but apparently preferred to avoid any risk of further action against its bank accounts, and any risk of further antagonizing a government that was after blood. In the end, NETeller chose to reach a settlement rather than fight, and we're in no position to force the company to change that decision. I'd like to see the money come back out of the federal treasury, but have no power to try to make that happen. NETeller needs to live with the consequences of its choice. Although the U.S. market was formerly the lion's share of its business, NETeller continues to have great ambitions of expanding its operations globally, and of being very profitable in the future. They are undoubtedly making all of their choices with that goal in mind. For the same reason, they must continue to protect their reputation, and will continue to be sensitive to the possibility of further legal action.

It turns out that there have been people working actively for many months to take legal action against NETeller. Quite a few customers had account balances close to $100,000. They were obviously highly motivated to make certain that NETeller paid them. It looks like the threat of suit had a lot to do with NETeller moving forward as fast as it did (not to say that it was especially fast) in arranging for the return of customer monies. One might conclude that between them, NETeller and the U.S. government dragged things out about as long as they could have without a big lawsuit, and efforts to get prejudgment relief like an injunction, having been started.

People interested in possible legal action have been gathering at a Yahoo group with the name "SueNeteller." Catchy, isn't it? The moderator has to approve membership applications. I've applied, but haven't received a response yet.

There seems to be continued exploration of a possible suit to recover interest. There may be barriers to a class action, so suit might proceed as an ordinary action that just happens to have several thousand named plaintiffs. Apart from the question of interest, it is widely believed that NETeller turned over detailed records of all customer transactions to the U.S. government. This could give rise to claims for violations of the company's promises of customer privacy.

So I won't have more to say here about NETeller. If any of you are interested, I'd invite you to look into the Yahoo group, where I'm sure there will be a lot of information exchanged.

I trust you all have your money by now, and are ready to go on to bigger and better things.

[Norm Wattenberger]

> NETeller could have simply
> mailed its customers checks out of its other funds,
> but apparently preferred to avoid any risk of further
> action against its bank accounts, and any risk of
> further antagonizing a government that was after
> blood.

Do you know this to be true? As I understood it; the specific accounts were frozen. A bank cannot pay someone with other funds when the gov't has frozen an account. The gov't had already threatened to jail the founders - even though they were no longer with Neteller. Actions by the corp. to circumvent the gov't actions would seem very dangerous and could endanger the corp's ability to serve its other customers. Customers in countries that had not taken this extraordinary action. The path Neteller took ended well for most customers.

I understand the anger of customers. But I think it misdirected to go after another victim. We know who the bad guys are. Vote them out of office. Starting with Senator John Kyl. He slipped the UIEGA through Congress just before midnight the day before Congress adjourned - without debate.

[Sun Runner]

WRG:
> NETeller needs to live with the consequences of its choice.

This is not a popular position to assert, but with all respect, maybe you should be living with the consequences of the actions you took. I won't spend paragraphs rehashing my 'the writing was on the wall' posts but legal or not, the risk was out there to continue playing on line from the US.

On the other hand, take the appx $250 in interest you are all knotted up about, put it down on a lawyer willing to bet on the come, and file a class action lawsuit. I'd bet NetTeller would pay to make it go away. Maybe the good lawyers have either decided it has no merit or there is one in the works as we speak.

Norm:
> (Senator John Kyl) .. vote them out of office .. He slipped the UIEGA through Congress just before midnight the day before Congress adjourned - without debate.

Vote 'em all out for my money. He may have slipped it through without debate but not without a vote. What excuse do the rest have? To busy to pay attention?

[Sun Runner]

> I understand the anger of customers. But I think it
> misdirected to go after another victim. We know who
> the bad guys are. Vote them out of office. Starting
> with Senator John Kyl. He slipped the UIEGA through
> Congress just before midnight the day before Congress
> adjourned - without debate.

Do you know where/how to find a public (internet) record of this vote, of any vote?

Thanks.

[Norm Wattenberger]

> Vote 'em all out for my money. He may have slipped it
> through without debate but not without a vote. What
> excuse do the rest have? To busy to pay attention?

No, it was not voted on as a separate bill. They slipped it into the port security act just before midnight minutes before Congress adjourned for the elections. Few Senators would vote against port security.

[Norm Wattenberger]

The original bill passed the House and failed in the Senate after which they slipped it into the port security act. So the vote on the port security act isn't meaningful. However, co-sponsors of the original House bill H.R. 4411 [109th]: Internet Gambling Prohibition and Enforcement Act:

Rep. James Leach [R-IA] (sponsor)
Rep. Todd Akin [R-MO]
Rep. Spencer Bachus [R-AL]
Rep. James Barrett [R-SC]
Rep. Charles Bass [R-NH]
Rep. Roy Blunt [R-MO]
Rep. Sherwood Boehlert [R-NY]
Del. Madeleine Bordallo [D-GU]
Rep. Charles Dent [R-PA]
Rep. Vernon Ehlers [R-MI]
Rep. Jeffrey Fortenberry [R-NE]
Rep. Trent Franks [R-AZ]
Rep. Wayne Gilchrest [R-MD]
Rep. Paul Gillmor [R-OH]
Rep. Darlene Hooley [D-OR]
Rep. Bob Inglis [R-SC]
Rep. Mark Kennedy [R-MN]
Rep. Mark Kirk [R-IL]
Rep. Thomas Latham [R-IA]
Rep. Michael McCaul [R-TX]
Rep. Thaddeus McCotter [R-MI]
Rep. Thomas Osborne [R-NE]
Rep. Mike Pence [R-IN]
Rep. Thomas Petri [R-WI]
Rep. Joseph Pitts [R-PA]
Rep. James Ramstad [R-MN]
Rep. Michael Rogers [R-MI]
Rep. John Shadegg [R-AZ]
Rep. Christopher Shays [R-CT]
Rep. Mark Souder [R-IN]
Rep. Lee Terry [R-NE]
Rep. Frederick Upton [R-MI]
Rep. James Walsh [R-NY]
Rep. Debbie Wasserman Schultz [D-FL]
Rep. Roger Wicker [R-MS]
Rep. Addison Wilson [R-SC]

The full vote is at www.govtrack.us/congress/vote.xpd?vote=h2006-363

The first 23 of the 35 co-sponsors of the proposed bill to overturn the 2006 Act:

Rep. Barney Frank (D-Mass.) (sponsor)
Gary L. Ackerman (D-NY)
Shelly Berkley (D-NV)
Howard L. Berman (D-CA)
Michael Capuano (D-MA)
Julia Carson (D-IN)
Wm. Lacy Clay (D-MO)
Joseph Crowley (D-NY)
Bob Filner (D-CA)
Luis V. Gutierrez (D-IL)
Steve Israel (D-NY)
Peter T. King (R-NY)
Carolyn McCarthy (D-NY)
Jim McDermott (D-WA)
James McGovern (D-MA)
Charlie Melancon (D-LA)
Ed Perlmutter (D-CO)
Ron Paul (R- TX)
Ciro D. Rodriguez (R- TX)
Linda T Sanchez (D-CA)
Edolphus Towns (D-NY)
Melvin L. Watt (D-NC)
Robert Wexler (D-FL)

[Norm Wattenberger]

I don't know the structure of Neteller Corp.; but it may be illegal for them to pay interest on these funds.

[WRX]

Norm, the news that came out was that the government prevailed upon DOMESTIC financial institutions to hold up $40 million plus in NETeller funds that were in transit, under the rubric of seizing it as "evidence." This had no effect on the bulk of NETeller's trust funds, which were held in banks in Europe and maybe elsewhere.

Tangling with the U.S. government is always dangerous. NETeller's actions were understandable, but the question is why should the customers come out losers because of NETeller's problems? Eventually, someone's going to have to stand up to this administration, or we've all had it.

I'm not so much angry at NETeller as just wanting business obligations to be honored and enforced, and wanting the interests of customers to be respected. I agree that any decisions should be based not on emotion, but on sound judgment. "Tell Michael I always liked him. It was strictly business."

Sure, I knew the risks of online play, and I accept the consequences. That doesn't mean that I'm going to forfeit what I think is due me. I don't see NETeller as an object of pity. It is a large international business. It was founded by sophisticated people, who were looking to make a bundle, and who succeeded to an extent. They, too, knew the risks. If there should happen to be a class action that results in payments, will you all turn down the money?

I recently came across a really good analysis of the UIGEA that had escaped me earlier. You might enjoy this for the focus on the political aspects of its passage. See the associated link.

http://www,firstamendment.com/UIEGA.html