Fraud found in Obama’s online donations

President Barack Obama’s 2012 campaign has hundreds of thousands of eager, low-dollar donors — and a tiny trickle of unwilling, defrauded donors.

The latest example comes from David Newman, who found a $15 charge, dated May 6, from the “Obama For America” campaign on one of his debit cards.

Newman had supported Obama in 2008, but “I didn’t sign up to say ‘Do this every three months or every three years when you need money,’” he told The Daily Caller.

“This is completely 100 percent unauthorized,” said Newman, an information technology specialist. The money has since been returned by Bank of America, and the debit card has been cancelled, he said.

Newman’s example follows the publication of two examples of small-scale fraud by Powerline, a conservative blog. For example, “Bill G” told Powerline that he had found a $10 charge to “Obama for America” a few weeks after someone had secretly changed his address in the bank’s database.

The Obama campaign declined to answer TheDC’s questions for this story.

These minor examples of fraud, however, follow the discovery that Obama’s campaigns in 2008 and 2012 adopted shady practices that increased the potential for fraud.

In 2008, for example, Obama’s 2008 campaign accepted donations made via untraceable digital gift cards sold over the counter by Mastercard and Visa. National Journal proved that practice on October 24, 2008, but a recent test by TheDC showed that his campaign is now rejecting donations made via gift-cards.

However, Obama is still using many of the same tech experts that he used in 2008, and is still accepting credit card donations made under incorrect names, according to numerous reports from blogs.

Like in 2008, the 2012 campaign is also not asking donors to provide the three-digit or four-digit CVV number on credit cards. That decision reduces the campaign’s fundraising costs, but increases the chance of fraudulent donations by people who know the primary long number of a credit card, but not the short CVV number.

The practice may have contributed to a 2008 fraud when a woman in Missouri, Mary Biskup, discovered that her name had been attached to $174,800 in credit card donations sent to the Obama campaign. Biskup told the Washington Post that her credit-card was not charged for the donation.

Obama’s campaign is not legally required to ask for the CVV number. It is also not required to confirm that the names given by small-dollar online donors are correct, partly because the campaign automatically collects the real names and addresses attached to donors’ credit cards.

Yet a campaign’s decision to accept the false names attached to small donations can have a broader impact than a few cases of fraud.

That’s because campaigns are free to assume that multiple small-scale donations made via one credit card are from different people, providing that different false names are provided online with each donation.

They’re free to do that even if donors’ fake names are utterly implausible, such as “Adolf Hitler,” “Osama bin Laden” or “Mickey Mouse.”

The loophole is found in rules set by the Federal Election Commission, which has little legal authority to investigate evidence of small-scale credit card fraud by political campaigns.

The 2012 Obama campaign’s apparent decision to accept small-scale donations made under false names could allow for a stream of donations from illegal donors, such as people who are neither citizens nor residents of the United States.

The decision would also allow the campaign to accept donations far above the limit of $2,500 per person, providing each donor supplies a false name with each donation. The FEC limits personal donations to $2,500 per campaign.

So far, there’s no evidence that Obama’s 2012 campaign is accepting illegal online donations that exceed federal limits or that come from foreigners. He has returned high value checks from at least three people suspected of links to criminals.

But if any campaign chooses to accept online donations under false names, and if it chooses not to add up contributions made via the same credit card, it could also receive a financially significant amount of illegal donations.

That political risk exists because simple software allows illegal donors to deliver unlimited numbers of small-scale donations via credit cards.

In 2008, National Journal successfully used custom made software to deliver numerous “robo-donations” to three campaigns via gift cards. The test was conducted after a check of Obama’s 2008 campaign records which showed numerous, sequential and identical donations donations by donors with strange names, such “Doodad Pro.”

“Doodad Pro” submitted at least 791 contributions by October 2008, providing $19,065 to the campaign, while “Good Will” sent in 835 donations worth $20,225 between March and May 2008. The source of those donations was not disclosed by the 2008 campaign.

GOP campaigns have so far had better security than Obama’s campaigns.

In 2008, Sen. John McCain’s online donation system rejected anonymous gift card donations. Currently, Gov. Mitt Romney’s websites asks donors for the CVV number.

A pattern of fraud in the Obama campaign’s fundraising system should damage the campaign’s trustworthiness, said Newman. “The one thing you have is trust when doing online business… [and] if you have someone collecting credit-card information, you are totally responsible” for its security, he said.

At the moment, he added, “this smells like a Nigerian bank-account scam.”

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