BAD NETELLER COMMUNICATIONS UNDER ATTACK

23 February 2007

When a crisis of this proportion hits, players deserve to be better informed

InfoPowa's unsuccessful attempts to obtain answers from embattled e-wallet Neteller to straightforward U.S. player questions regarding their frozen funds were echoed this week in an editorial piece written by the Canadian webmaster of portal Major Wager.com, Hartley Henderson.

After three weeks of getting the brush-off from Neteller and its PR machine, the remarkably patient Henderson has gone to press with a valuable article which records the whole Neteller debacle from the passage of the Unlawful Internet Gambling Enforcement Act to the present uncommunicative position of the Isle of Man based e-wallet, which is currently in negotiations with US Justice Department officials amid fears that it is disclosing private and personal information about its American clientele.

Emphasising that Neteller cannot be held responsible for the aggressive actions taken against it by US Department of Justice officials, Henderson is nevertheless critical of the manner in which the e-wallet company has responded to the situation, and its lack of timely communication with its US customers, who have considerable sums of money frozen as a result of official US actions.

"One thing must be made clear: NETeller cannot be blamed for the situation it has found itself in," writes Henderson. "The arrests of its former managers, the citations issued against it by the U.S. Department of Justice and the decisions by U.S. banks to stop dealing with them was no fault of their own.

"However, the actions and attitude of the company following the arrests of [former Neteller directors] Lefevre and Lawrence has been inexcusable. Companies often find themselves in difficult spots but usually try and do what they can to ensure that the best interests of all parties that deal with the company are met. Unfortunately, NETeller's actions following the arrests have been all self centered, made worse by their uncooperative customer service and public relation's people."

Henderson goes on to summarise Neteller statements made in the wake of the UIGEA last year, which essentially reassured both investors and customers by asserting that the company would continue to operate its business whilst watching developments regarding the new legislation over the 270 days during which regulations were supposed to be framed.

The company also promised: "We will keep our shareholders, merchants, customers and employees informed of any developments during this challenging period."

Essentially, NETeller stated that they didn't feel there was any concern in dealing with American accounts because the company was not located in the United States, writes Henderson. "However, they had until July of 2007 to determine exactly how the United States was going to proceed and would determine what route to take at that point. They knew there would likely be some fallout as a result of the act, but there was no immediate concern. The statement clearly was designed to assure customers and shareholders that the United States market which made up most of NETeller's business was not going to be brushed away like other British gambling companies had done to Americans immediately following the UIGEA's passage."

The attitude changed in mid January, when the U.S. Department of Justice arrested NETeller founders John Lefevre and Stephen Lawrence, which certainly caught the company by surprise.

Henderson opines: "Of course such issues happen to large corporations all the time, but any good company will assess the situation in times of crisis and carefully devise a plan that is in the best interests of its shareholders, customers, creditors and employees.

"But this is NETeller. Instead, the company issued a statement confirming the arrests of its former management, and then the Board asked that the trading of its stock be halted until more details were known. Clearly the company wanted to avoid a situation where shareholders started running for the exits, but at the very least they could have provided a detailed assessment to the general public with more details. Instead they chose to say as little as possible.

"The following day the company then made what can only be called a hasty and impulsive decision to cut off the American market.
"That may indeed have been the best strategy for the company, but surely such an important decision would only be made after carefully considering the ramifications for all parties concerned, which clearly NETeller didn't bother doing.

"To make matters worse, in typical NETeller fashion, the company in stating that it would no longer do business with American citizens, left them hanging in the wind. It was unclear to American customers what their options were, but one thing which was confirmed was their inability to transfer their funds to online gaming sites. Most American customers thus opted to withdraw money by EFT only to discover their ETFs declined by U.S. banks who had decided to stop partnering with NETeller."

Henderson examines several options that Neteller could have considered, and precautions such as giving Americans time to withdraw their funds before it lowered the boom on them. "However, the decision to try and comply with the U.S. Department of Justice was the decision they chose to make, as unwise as it may have been. What the company did in the following days, however, was inexplicable and inexcusable," in Henderson's opinion, which will resonate with many in the industry.

He goes on to outline person-to-person transfer moves made by many players attempting to retrieve their at-risk monies in the absence of any assistance from Neteller, and the counter move from Neteller which cut off this avenue despite benefiting from it in terms of charges for the service. And in the meantime, the company put the remaining American post up funds in trust at a British bank and somehow convinced many in the industry that the money was safe and secure from the United States Department of Justice, he claims.

"All the while the company ignored phone calls, emails and live chats. Then, on February 7th, came the ultimate betrayal when NETeller allowed the U.S. goverment to seize $55 million of customer money. Instead of fighting the Department of Justice for taking money that was entrusted to them by American customers, NETeller instead decided to cooperate with the U.S. Feds.

"To make matters worse, any correspondence by concerned American customers was met with contempt and anger. What unbelievable gall! Let's equate what NETeller did to a different industry. Imagine you go to a car dealership, are welcomed by a salesman, taken for a test drive, put a down payment on a car and are promised delivery in a week. Then when you go to pick up the car, the salesman gets angry, calls you a criminal and tells you that you can not take delivery of the car until the government looks into your background and decides whether you can take delivery. In the meantime he keeps the down payment and kicks you out. And to add insult to injury, he gives you no reasonable explanation for his actions and won't return any phone calls or emails. This is precisely what happened with NETeller," argues Henderson.

The Major Wager portalmaster is as puzzled as everyone else as to why Neteller decided to apparently fold its cards in the face of the US officials' extra-territorial activities, but he quotes a legal writer's opinion shared by many in the industry that Neteller and the DOJ will likely come to an agreement.

"Neteller will announce that they will no longer do business with Americans, and they may have to pay a fine; the DOJ won't indict the company, or any of its current stockholders. The DOJ might even accept some sort of plea bargain for the two founders who were arrested. It's also certain that as part of such a deal Neteller will agree to release details of all transactions between American customers and Neteller," he writes.

The breach of customer privacy and the implications of such disclosure that this course suggests will anger customers and alarm other interested parties. And Henderson feels that in an effort to save the remnants of their business, NETeller has decided to sell out its loyal U.S. customer base in the hopes the DOJ would turn their focus elsewhere.

"Unfortunately for U.S. customers who put money into NETeller and shareholders who purchased the stock with the assumption the American market would be a staple of NETeller, they are left holding the bag. And as to why NETeller won't talk, obviously if someone becomes an informant to the FBI they aren't going to stay friendly with those that they have turned in," he concludes, remarking that the treatment of US customers is a cautionary tale for those in other countries.

Online Casino News courtesy of InfoPowa

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