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Online Fundraising Raises Questions

by: JimC

Sun Oct 26, 2008 at 07:51:58 AM EDT


Time for some of that "national dialogue." Whenever we have a national racial incident -- say, Michael Richards and his tragic crackup in L.A. -- someone calls for a "national dialogue on race." So we have it, for a couple of days or maybe a week, and then we drop it. Forgive the analogy, but the point is, if we don't want to talk about it, we don't talk about it.

Politics, for good or ill (and I would argue, ill) never stops. So maybe -- maybe -- this endless and breathtakingly expensive political campaign will spur some useful dialogue.

I had planned to bring this up on November 5 or 6. But some conservatives are jumping the gun.

http://www.washingtonpost.com/...

Campaign Finance Gets New Scrutiny
Obama's Take Raises Questions About Web

Barack Obama's unconventional fundraising success, many experts say, could transform the campaign finance system, though it also raises new questions.

By Matthew Mosk
Washington Post Staff Writer
Sunday, October 26, 2008; Page A01

Sen. Barack Obama's record-breaking $150 million fundraising performance in September has for the first time prompted questions about whether presidential candidates should be permitted to collect huge sums of money through faceless credit card transactions over the Internet.

Lawyers for both the Republican and Democratic parties have asked the Federal Election Commission to examine the issue, pointing to dozens of examples of what they say are lax screening procedures by the presidential campaigns that permitted donors using false names or stolen credit cards to make contributions.

"There is so much money coming in and yet very little ability to say with certainty that you know who is giving it," said Sean Cairncross, the Republican National Committee's chief counsel.

Sean, my friend, please take this in the spirit that it is intended: You are a lying sack of s**t. But don't take my word for it, look across the proverbial aisle:

In a paper outlining those safeguards, provided to The Washington Post, the [Obama] campaign said it runs twice-daily sweeps of new donations, looking for irregularities. Flagged contributions are manually reviewed by a team of lawyers, then cleared or refunded. Reports of misused credit cards lead to immediate refunds.

In September, according to the campaign, $1.8 million in online contributions was flagged, and $353,000 was refunded. Of the contributions flagged because a foreign address or bank account was involved, 94.1 percent were found to be proper. One-tenth of one percent were marked for refund, and 5.77 percent are still being vetted.

I suppose Mr. Cairncross would argue that it's easy for the wealthy Obama campaign to vet its donors, whereas he needs every dime. But afford is a relative term in politics, and the RNC has plenty of cash.

It's great to see that the Obama folks are so cautious. Here's hoping it's genuine vigilance and not "Let's cover our a** from potential criticism from McCain." Then again, I shouldn't care about the motivation.

The main premise of this concern, that credit card transactions are "anonymous," is patently ridiculous. In our great nation, every financial transaction involving a bank (including you taking 20 bucks from an ATM) is monitored. Those transactions are ranked according to risk. Higher risk transactions, like large cash deposits, are flagged immediately, as are certain behaviors -- if you take a credit card cash advance in a casino, that goes on your credit report.

This article cites conservative bloggers using fake names to make Obama donations. Thanks for the money, guys. All the transaction software cares about is the card. I know this because, yesterday afternoon, I bought groceries using a debit card. The cashier did not ask me for an ID. And by the way, this was not my regular supermarket, so the guy had never seen me before. The line had to move.

My wife is licensed in her profession, so she pays a fee to the state licensing board. Once or twice, she's forgotten to mail the form and had me pay online to make sure it got there on time. This happened at least once before we were married. How does the state know I'm not committing fraud? It doesn't. The transaction device does not care about the name.

So these conservative bloggers are either deliberately ignoring this fact and trying to create trouble for Obama, or just unaware.

I am here to help. I'm looking forward to our national dialogue on campaign finance.

JimC :: Online Fundraising Raises Questions
Tags: , , , , (All Tags)
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Hitting and running (0.00 / 0)
Family is waking up; be back later.

Wow 8:06 AM (0.00 / 0)
Mine was up and running at 7:49 AM

Feeling hopeful since 2004...

[ Parent ]
Concern trolling. (4.00 / 1)
If the RNC is so concerned about the security of online financial transactions, why is it only a problem with respect to campaign finance?

If you're really so concerned, why not raise the alarm about online banking and securities and commodities trading too?  Or all the other online stores?  How many trillions of dollars go through the internet every year?

Why are they more worried about transactions involving sums of no more than $2300 when there are equally unsafe transactions involving billions?

The other day on FOX News, they were complaining about how Obama broke his promise to take public funding (false), and then saying it's now clear that campaign finance reform as an issue was always just a ploy that Democrats had been using to try to get an upper hand against Republicans.  Oh, good call, FOX, decades ago Democrats got together and said "hey, know how the Republicans are much better at fund-raising?  Well let's spend many, many years trying to institute a half-assed version of public funding, wait until the internet exists, trick the Republicans into using the public funding, then not use it ourselves, all of a sudden being really good at fund-raising, and take the election away from them! [EVIL LAUGH]"

Yeah right.


Explain this to me: (4.00 / 1)
Buying a Rolls Royce on ebay: Safe
Giving $15 to the Obama campaign: Suspect

[ Parent ]
Or selling a plane on eBay (4.00 / 1)
Maybe it's OK if it doesn't actually sell.

[ Parent ]
How Ironic (4.00 / 1)
Republicans for regulation of financial transactions using the internet.

"When you get to the end of your rope, tie a knot and hang on."  Franklin D. Roosevelt    

That IS ironic! (0.00 / 0)
Since when do Republicans support regulating transactions?

[ Parent ]
Parties involved in a credit card transaction (0.00 / 0)
- The bank that brands your card (Citibank, American Express, etc.)

- The processor that handles the transaction and charges a fee (called an interchange fee) to the merchant (American Express carries higher fees, and that's why smaller merchants sometimes wince, or refuse to take it, when you pull one out.)

- The merchant's bank

Other parties may include:

- Your bank's processor (it may not be your bank)
- The merchant's processor
- The merchant's bank's processor

Sounds crowded, I know. And there may be overlap in some of the roles -- the same company may process for many banks, and process both sides of the transaction, your debit and the merchant's credit. But there is no doubt that even the simplest transaction generates quite a bit of paper.

What if one uses PayPal? Same deal -- PayPal, or one its competitors, is tied to a bank account.

The monitoring, of course, is largely automated, and risk ratings are assigned, like I said. My guess is, political donations are low risk -- it's a donation after all, and as long as the receiving organization is legitimate, the risk is low. A regulator is not going to sweat much over donations to the Red Cross (though there are those who say they should).

How easy/difficult would it be to change the risk factor in political donations, and therefore automatically trigger greater scrutiny? Incredibly easy. Should it be done? I don't know.



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