Touboul’s mechanism has been a boon for the adult online industry, which has been beset by huge chargebacks and fraud through the years using traditional payment services.
His privately held company, ChargeMeLater, allows surfers to buy services and products online and pay by entering the sum of the last four digits of their social security number.
Third-party credit card billing services are somewhat shrinking, due to new rigid policies from the merchant banks which host Visa and Mastercard.
CC Bill, iBill and Epoch Transaction Services lead as the adult industry’s third-party leaders. American Express has refused to handle porn transactions since 2000, and PayPal, now owned by eBay, ceased to deal with the trade in May 2003.
A dialer system allows buyers to bypass credit cards altogether and pay with their phone bill, or on a separate bill.
Secaucus, N.J.-based ChargeMeLater uses a proprietary algorithm that corroborates the identity of users based on a search of multiple databases and phone numbers, validates their ages and addresses, makes sure they’re good for the money, and then sends a bill to the user’s house.
“We have created a mechanism that could really change the face of commerce on the Internet,” Touboul told Forbes magazine.
But ChargeMeLater has some problems with the Federal Trade Commission and attorneys general in 20 states. The FTC and the states accuse Touboul and his other company, Alyon Technologies, of “unjust enrichment,” “unfair” billing and violations of the FTC’s Pay-Per-Call Rule, as well as other misdeeds.
Touboul’s problem with the FTC and the attorneys general is his deceptive use of a “dialer,” a downloadable software program that disconnects computer users from their regular Internet Service Provider and reconnects them to a server that charges at a rate of $5 per minute.
The company claims it was preparing to sign up major companies for the company’s billing system, but the FTC lawsuit has put those plans on hold.
ChargeMeLater works closely with Barcelona, Spain-based Electronic Group Interactive, which owns Nocreditcard.com and redirects to sex-explorer.com. From there, you select a dialer or broadband connection to access an endless array of porn sites.
Electronic Group Interactive claims its dialer is outsourced to porn sites on 15,000 servers in 250 countries, many of which use Touboul’s Alyon for bill processing.
The FTC has nailed several dialer outfits, and the intermediary billing aggregators such as Alyon that collect the money either by direct billing, as with Alyon, or by deviously “cramming” charges onto consumers’ phone bills.
Now Touboul is trying to distance his company from the Alyon name, switching into ChargeMeLater and another firm, Affirme.
“Once a brand is affiliated with the adult industry, it becomes very unlikely that mainstream companies, no matter how good the deal is, will be willing to utilize its services,” Touboul said.