If you are among the adult webmasters who worry that your involvement in the industry puts you at high risk for credit card fraud, nonpayment, or trouble with the law regarding minors, then (and this might be considered an understatement by some in the biz): “Baby, you ain’t alone.”
In fact, many webmasters readily admit that they’ve been raked, dragged, and downright screwed over the coals by deadbeat would-be customers who won’t pay, minors who sneak onto their sites and make purchases that are eventually contested by their parents, and unscrupulous grifters who use stolen credit cards. This, of course, makes the patented, nearly fraud-proof technology employed by ChargeMeLater.com verifiably revolutionary in the adult entertainment trade.
The relatively new website, which launched in April of this year following a protracted skirmish between ChargeMeLater’s “big brother” company Alyon Technologies and the Federal Trade Commission (FTC) over allegedly “unfair” billing practices, is one of the few that provides webmasters a sense of security by offering a virtually foolproof way to collect funds from consumers that inhibits credit card fraud. What’s more, the credit-card-free payment method is more user-friendly for those who balk at giving their card numbers out over the Web and makes it harder for kids to access adult material using their parents’ cards.
The proprietary billing system is groundbreaking for the reasons listed above, yes, but also because of its ability to generate retention in an industry built on such a premise. “When it comes to the sale of adult products or content on the Internet, users are leery of giving sensitive financial information,” says Bjorn Skarlen, business development director for the Electronic Group, the parent company that houses Alyon and launched both ChargeMeLater and its European cousin, NoCreditCard.com. “They will likely feel more at ease going through the CML process as opposed to filling out lengthy forms required by credit card processors. This technology will allow webmasters to capture and retain more consumers than ever before.”
ChargeMeLater’s history extends back to 1996 in France, where two ambitious French entrepreneurs named Pascal Pegaz and Gerard Spiegelhalter came up with the bright idea that paying for phone sex over the Internet would soon become a new trend. (The concept had already proved successful with Minitel, a French network on which people paid per minute for chatting with girls. Consumers connected to a website through a proprietary dialer technology and were able to access desired content on a per-minute basis without long-term commitment.) The two men purchased the domain name NoCreditCard.com, coded their dialer technology, and soon launched the company.
Although NoCreditCard’s dialer is simple software based on the same specs as well-known applications such as Apple, Microsoft, and AOL, the Electronic Group faced some resistance in those early days. “Like all new concepts, the beginning was laborious,” reports Skarlen, “especially in an industry made up of audiotext companies making millions of dollars, advertising numbers, and letting consumers call and talk to girls and guys all over the world. They saw the Internet as something new and threatening.” But through some unique marketing strategies that involved posting on news groups, indexing on sites like AltaVista and Yahoo, and geo-targeting, NoCreditCard eventually took off, and, Skarlen says, “the rest is history.” Today the Electronic Group employs several hundred employees, operates from 10 different locations (including Moscow and Los Angeles) in 20 languages, and claims to be “one of the key players in the adult industry” with more than 7,000 webmasters in its affiliate program.
Skarlen attributes the concept’s success to its practical business model, which, he says, “has always been to coordinate content producers and traffic generators with a billing and a payment mechanism as the paradigm.”
While the Electronic Group itself offers “a sophisticated billing and payment platform with extreme flexibility” that operates according to a preset and agreed schedule through a cash card, ChargeMeLater’s credit-card-free payment method operates through a patented technology (called Express Verifiable Authorization) to determine a user’s identity and extend him or her a line of “virtual credit.” Matching bits and pieces of identifiable personal information (such as telephone number or the last four digits of a Social Security number) with data contained in consumer databases (like those of credit bureaus and phone companies), EVA – which boasts federal endorsement – tracks age and identity and makes it nearly impossible to falsify either.
“Our process only requires innocuous and readily available information from the user, making the transaction quick and efficient, both from a user standpoint as well as from the content provider side, while virtually eliminating minor access to improper content and therefore avoiding legal issues,” Skarlen says. “Because EVA is approved as legal and enforceable by the FTC, it also eliminates the risk of chargebacks while increasing the content provider’s customer-relationship management.”
Because of the “paper trail” generated due to the payment method’s authorization process, it makes it nearly impossible for people to skip out on their payments. If a consumer wishes to dispute a payment owed to ChargeMeLater, they must submit a written, signed affidavit affirming the charges either were incurred by a minor or were not authorized by the owner of the telephone number used as a verification reference. Since affidavits have the weight of the law behind them, the folks at ChargeMeLater are confident that people will “pay up” to avoid trouble with the law. As Skarlen notes, “CML always follows the EVA process and concept and therefore is always on the right side of the law. This prevents minor access or identify theft, and therefore chargebacks, which are undoubtedly the cancers of the adult industry.”
Skarlen, who says that webmasters should “look upon a billing option as not only the tool that will bring them money, but also as a way to measure their growth and reliability of their services,” adds that he feels that CML is such a tool. If the promise of guaranteed funds and less legal hassle isn’t enough for webmasters, Skarlen notes that “CML gives the Internet entrepreneurs the integrity of data necessary to forecast their growth based on accurate statistics which are not subject to adjustments due to chargebacks or unbillable [transactions]. Once the webmaster is paid by CML, the money is staying with them and will not be subject to deductions from future payouts and revenues.”
Although ChargeMeLater’s services are not restricted to the adult industry, Skarlen notes that, because of the looming threat of fraudulent customers, the X-rated biz is a prime candidate for such a billing option. What’s more, he adds, the industry’s penchant for new and uniquely industrious business opportunities makes it a perfect “partner” for CML.
“The adult industry is always on the edge of testing new products and systems, and it is in our point of view a very interesting arena to operate within,” he offers. “As we are exploring some new markets (such as mobile entertainment and dating sites), Electronic Group will always be focused on the adult industry as a key for success and long-term commitment.”
Of course, he concedes, the enduring popularity of the industry doesn’t hurt either. “Adult content has been and will forever be something that the end users want to buy in any format available,” he continues. “We believe that the online and wireless world will continue to be a lucrative area to work within, and we are happy to help all those serious webmasters who want to provide the customer with high-quality content behind a private enhanced billing system.”
Of last year’s bout with the FTC (the federal commission brought a civil suit against Alyon and a subcontracting collection agency in May of 2003, alleging that the companies had unfairly billed and attempted to collect from consumers in violation of several U.S. trade statutes—though Alyon eventually emerged victorious, with the FTC offering an apology and officially endorsing the Express Verifiable Authorization technology), Skarlen and company maintain that the entire case was bogus from the get-go.
“It is because our process was always above board that we won the case,” Skarlen says, adding that the suit actually turned out to be a blessing in disguise for them. “It is through the Alyon settlement with the FTC and the state’s attorney general that we were able to establish EVA,” he explains. “In a roundabout way, it was through the litigations proceedings that we were able to obtain the green light from the federal judge and ultimately from the state and federal government.”
Skarlen says that the Electronic Group will continue developing new billing methods (including a new microbilling product known as 123ticket.com that will allow merchants to offer products on a “pay as you go” basis), and adds that the company is especially looking forward to making bigger strides in the adult mobile and dating niches (its U.S.-based site, XXXMeeting.com, is already catching on as a hot dating portal). Through it all, he says, the company will continue to succeed because of its motto that “the customer is always boss.” It’s also a theory that all webmasters should subscribe to as well. Says Skarlen, “It should never be forgotten who’s in the driver’s seat.”
(Additional reporting by Kathee Brewer)
