Authorities had wondered how Web porn host and convicted felon Kenneth Taves got over three million credit card numbers to bill for access to his adult sites - which the cardholders didn't want in the first place. And now they know: Charter Pacific Bank sold him the information. \n
But investigators discovering the credit data sale to Taves - who has a 1980 conviction for accessory to murder on his record and was on probation for a conviction in a check counterfeiting scheme when the sale was made - aren't quite certain the credit data sales were illegal.
And that makes an awful lot of finance watchers and privacy advocates nervous.
"We're looking at the issue of exactly what happened here," the Federal Deposit Insurance Corporation's assistant regional director, George Doerr, tells the Los Angeles Times. "It's a problem giving customer information at all. To give out credit card numbers, that's pretty serious."
The bank itself is no stranger to the adult entertainment business, since they normally process credit card transactions for adult entertainment companies - from X-rated Web sites to telephone sex lines and back - and make millions in so doing.
The bank itself says it sells such data files to merchants as "a tool for verifying customers' card numbers, particularly in online transactions," the newspaper says. Charter Pacific says Taves bought the databases before an account for one of his companies - Netfill - was closed due to excessive chargebacks (refund demands), the Times adds.
Taves has argued that unscrupulous computer users may have put stolen credit card numbers into his adult Web sites, the paper says, causing the inaccurate card charges. The Federal Trade Commission, which brought the case against him, plans to meet with his attorneys Friday to try to work a settlement out.
But the paper also says that experts on banking law say that Charter Pacific would not have been barred by law from selling him the customer credit data even if it had known beforehand of his criminal record.
"I find it outrageous," says CalPIRG Consumer Program Director Ed Mierzwinski to the Times, "that the law allows a bank to sell credit card numbers. This will help expose the seamy businesses these banks are in."
