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Porn biller denies data leak

March 10, 2006

 
Online payment service iBill said a massive cache of stolen consumer data uncovered by security experts did not come from its database. President Gary Spaniak Jr. says iBill cross referenced the 18 million records against its own database, and that only three e-mail addresses matched.


 

 

 

 
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Additionally, some entries in the stolen database were identified as purchases on Diner's Club cards, which iBill says it has never accepted in its nine year history.

IBD owns iBill (Internet Billing Company, LLC) and has additional investments, including a 34.7 percent minority equity interest in the post-bankruptcy, reorganized Penthouse Media Group Inc. and an interest in Interactive Television Networks Inc., formerly XTV, an IPTV broadband video content provider with a strong emphasis on direct-to-consumer adult programming delivery. Aside from its Pay-Per-View revenue sources, ITVN also offers video-phone sex.

iBill is best known as billing agency for the online adult entertainment industry. iBill also manages back-office functions including reporting, tracking and customer service. iBill while waning as of late, was one of the preeminent billing services in the online porn business.

Wired News reported that nearly 17 million customers of the third-party processor have had their personal information released over the Internet.

In an interview with XBiz, Interactive Brand Development President Gary Spaniak denied the allegations and said the Wired story "makes no sense."

"We don't even have 17 million customers," Spaniak said. "The FBI reached us two weeks ago, regarding this claim. I don't know where these companies [in the Wired story] got their information."

Spaniak, in a later interview, said iBill since its inception has less than 10 million unique customers.

According to Wired News, the stolen data covers a period between 1998 and 2003 and includes names, phone numbers, addresses, email addresses, IP addresses, users names, passwords, credit card types and purchase amounts.

The Secure Science security software company put this whole thing together with an assist from Sunbelt. They and both commented for Wired that this appears to be an inside job. According to their story, the files were generated by exporting a SQL database into a CSV format.

But, according to Wired, Secure Science's Lance James yesterday backed away from his conclusion that iBill was the source of the leak. He says pornography transaction databases may be considered especially desirable to spammers, and that a criminal may have deliberately mislabeled a database taken from another source.

However, an interestingly disturbing post on WarCry forum by JR "Razor" Sutich dated March 1, 2006, reads:

A colleague of mine just received an email from an online porn site. It was sent to an email address that he had only used for one purpose, to register for Horizons just after the game launched. Early on, Horizons took some flak for using a billing provider (iBill) who dealt primarily with Porn Companies. Now it seems that the email addresses from Horizons customers are being targeted by said Porn Companies and sent some really NWS stuff. And apparently, the Porn guys are claiming it's all legal:

"You are receiving this Monthly Newsletter because you provided us permission by agreeing to our privacy policy when you signed up for an Internet service/product that is billed by our company. If you feel that you are receiving this email in error, or wish to no longer receive this newsletter in the future, please click here to unsubscribe. You are subscribed to this list as: horizons@********.COM Please allow 48 to 72 hours for the unsubscribe to be processed. Thank you!"

Spaniak has his own theory on why a data thief might falsely link a database to iBill. He believes it's an outgrowth of animosity in the adult website community dating from the time when the trouble-plagued company was forced to suspend payments to its webmaster customers.

He says as long as iBill stays in business, it will try to repay those webmasters. "Over $20 million has been paid back, we have plans for paying back another $18 million."

I Bill, You Bill, We All Scream for iBill

The story of iBill's rise and fall and possible resurrection is a tale so complicated it would take a whole team of SEC lawyers and a couple of round-the-clock paralegals just to make sense of it all.

Without question, the financial and ethical integrity of iBill has been sorely compromised. When Deerfield Beach-based Interactive Brand Development (IBD), formerly Care Concepts I, completed its acquisition of the third-party processor from Penthouse International on January 21, 2005, they were taking on a company with a smoldering history of corporate takeovers, accusations of gross mismanagement, a flurry of lawsuits, and the revocation of the company’s merchant account.

On March 23, 2004, InterCept Payment Solutions – embattled by investors for not disclosing just how much of iBill’s revenue was derived from porn processing – sold iBill to Media Billing LLC, a 99 percent-owned subsidiary of Penthouse International.

When InterCept sold iBill, the processor was a mess. Not only were the company’s own shareholders suing it, but iBill also had a substantial debt. Media Billing purchased iBill for a mere $700,000 in cash and an $800,000 short-term note. They agreed to assume a $22 million working capital deficit.

Where the hell did all that money go?

Well, an iBill insider says it went with InterCept, who reportedly rode off into the sunset with nearly $31 million that was owed to iBill clients. On paper, Media Billing essentially paid $23.5 million for iBill.

A few more disastrous bumps occur in the road, and on July 30, 2004, Care Concepts announced it was buying both Media Billing LLC and iBill from Penthouse for $55 million in an all-stock deal.

On September 16, 2004, iBill's contract with First Data Merchant Services – their bank – expired and was not renewed. Penthouse International reportedly knew First Data was backing out several months beforehand, yet did not have another bank lined up. First Data subsequently withheld the release of millions of dollars due to webmasters.

On April 12, 2005, IBD announced that it would begin making long past-due payments to affiliates using iBill, payments that would only represent a portion of what webmasters are owed because IBD does not have the capital to pay everyone in full. Affiliates were asked to log into their merchant accounts and download the note payable for 100 percent on the dollar—in 50 percent increments over two years with a meager 3 percent interest.

On April 29, 2005, after several webmasters who maintained affiliate programs with iBill complained about not being paid, IBD blamed a temporary accounting glitch. The money, iBill president Gary Spaniak said, had been accidentally diverted to another account.

Spaniak insists that IBD will bring iBill back.

"I think we're pretty close to being fixed. We've paid back over $30 million, our processing is up and our clients are getting paid, he said. "We feel good about the direction we're going. We're going to save this thing."

In other words, the check is in the mail.

Full story: AVN Online: I Bill, You Bill, We All Scream for iBill: Is the check finally in the mail?




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Porn billing leak exposes 18 million buyers

 

 
   

 

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