Dubious donations: Obama campaign statement

Over at the Election Law Blog, Professor Rick Hasen has posted a statement from the Obama campaign on the charge that it does not follow best practices to prevent fraudulent donations to the campaign. Here it is in its entirety verbatim:

Credit card contributions to Obama for America are, in fact, processed using AVS (Address Verification System).

If a billing address is verified via AVS, then the credit card contribution is processed without delay. Some transactions caught by AVS may initially appear to a donor to have been accepted even though this is not the case. Obama for America employs a manual process to review any transaction flagged by AVS, also taking into account other fraud risk factors, and using fraud detection services provided by our credit card processor.

As an example, the contribution discussed here http://powerline.wpengine.com/archives/2012/04/dubious-donations-illustrated-illegal-contributor-edition.php may have initially appeared to have gone through when the donor completed the transaction at 10:18 a.m. but it was rejected at 4:51 p.m. under our standard fraud detection procedures.

So any claims that Obama for America has disabled AVS are inaccurate; any question about this would have been answered–if the question had been asked.

In most of our posts on the Obama campaign’s fundraising practices we linked to Matthew Mosk’s 2008 Washington Post story. Mosk confirmed what we and others had reported in 2008:

In recent weeks, questionable contributions have created headaches for Obama’s accounting team as it has tried to explain why campaign finance filings have included itemized donations from individuals using fake names, such as Es Esh or Doodad Pro.

Readers this year reported that they had repeated the experiment to the same effect. In the post cited in the Obama campaign statement, John Hinderaker reported his experience making an online contribution and setting up a grassroots fundraising page on the Obama site under the name Illegal Contributor, from Cell 13 of the Stillwater Prison. It’s good to learn that the Obama campaign’s back-end review managed to unravel John’s scheme.

The Obama campaign’s online fundraising methodology sounds like it hasn’t changed since 2008, or at least the reliance on back-end review. Here is the response Mosk received from the Obama campaign to his inquiry in 2008 along with the incident that prompted it:

Lawyers for the Obama operation said yesterday that their “extensive back-end review” has carefully scrubbed contributions to prevent illegal money from entering the operation’s war chest. “I’m pretty sure if I took my error rate and matched it against any other campaign or comparable nonprofit, you’d find we’re doing very well,” said Robert Bauer, a lawyer for the campaign. “I have not seen the McCain compliance staff ascending to heaven on a cloud.”

The Obama team’s disclosures came in response to questions from The Washington Post about the case of Mary T. Biskup, a retired insurance manager from Manchester, Mo., who turned up on Obama’s FEC reports as having donated $174,800 to the campaign. Contributors are limited to giving $2,300 for the general election.

Biskup, who had scores of Obama contributions attributed to her, said in an interview that she never donated to the candidate. “That’s an error,” she said. Moreover, she added, her credit card was never billed for the donations, meaning someone appropriated her name and made the contributions with another card.

We are glad to have the Obama campaign statement on record. I asked reader Ashley Tate to comment on it. Tate responds:

The manual validation they are talking about is a Web interface where the payment processor allows them to review (if they choose) transactions where the address did not match what was on file for the credit card. This is provided by all payment processors to allow for optional manual review when automated review is not being done. It works well for low volume systems where the liklihood of fraudulent charges is very low. If you tried this with a major consumer electronics site you would quickly be over your head and out of business. Perhaps they are paying more attention to these now and scanning for really obvious fake charges due to media attention.

I asked him to comment further in the context of the fraudulent campaign charge he himself received:

Their explanation would only be consistent with my experience if my credit card information (including billing address/zip) had been stolen and used only for Obama campaign donations. CVV plus AVS validation would still have prevented use of my card number since the physical card was not lost. (Unless there’s a lot of small-scale point-of-sale fraud occuring where retail employees are spontaneously stealing card information and only using it to donate to Obama.)

I have reached out by telephone to the Obama campaign and asked to be placed in contact with the apparently anonymous campaign official who wrote Hasen, or someone similarly knowledgeable. I have yet to hear back from the campaign. In the meantime, I invite readers who might be able to shed some light on the story to comment.

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