Psystar still down as Powerpay explains its decision

Psystar's store remained down on Friday, as its former payment-processing company expanded its explanation of why it pulled its services from the computer maker's site.

Anyone who might have wanted to order an Open Computer last night or today has been stymied by the second interruption in Psystar's online store.

The first interruption, on Wednesday, was caused when Powerpay pulled its services after Psystar violated the terms of its agreement, as reported by CNET News.com.

My colleague Richard Koman, at ZDNet, obtained a statement from Powerpay's CEO, explaining the reasons why his company pulled Psystar's account.

"PowerPay initially suspended and subsequently terminated the merchant-processing account of Psystar for three primary reasons: product/services not as represented in application, sales volumes grossly exceeded, (and) no address verification utilized," Steven Goodrich said in the statement.

Merchant service accounts are set up based on the volume of transactions expected to flow through an online store, Goodrich said. Psystar went well over its expected volume for the year in just a couple of days, as Open Computer orders poured in.

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"In this case, the applicant processed almost 200 percent of his anticipated annual volume over just a few days. In doing so, the applicant never used AVS (address verification services), which is a vital part of validating cardholder consent," Goodrich said in the statement. "This, coupled with the fact that product was substantially different from what was described in the application, left PowerPay no choice but to suspend services. The discrepancy in addresses and other info only add to our discomfort with the account."

After Powerpay pulled its support, Psystar resumed sales of the Open Computer through PayPal, which processed my transaction on Wednesday. I contacted a PayPal representative on Thursday after learning that Powerpay had pulled its services to see what PayPal's policies were regarding these types of issues.

Thursday evening, PayPal sent me this statement: "At PayPal, we take rights infringement very seriously. PayPal's Acceptable Use Policy prohibits the use of our services for 'items that infringe or violate any copyright, trademark, right of publicity or privacy, or any other proprietary right under the laws of any jurisdiction.' We use internal guidelines, as well as reports from rights owners, to determine violations of this policy. We would apply these standards to any products being sold from the Psystar.com site - currently, there are none."

Psystar's Mac OS X-based Open Computer is again unavailable for purchase, after a site outage.

(Credit: Psystar)

The curious tagline at the end was put there because a PayPal spokesman said the company was unable to actually verify what was for sale on Psystar's site, since it was down when the company checked it out Thursday.

Charles Arthur at The Guardian, who kicked off some of the skeptical coverage regarding Psystar's ever-changing addresses, wonders if Psystar simply overestimated its ability to run an efficient supply chain.

Right now, it's really hard to know exactly what to make of Psystar. To be fair, there are red flags galore, but it's quite possible that this is a company way over its head, when it comes to running a product distribution operation. It's not hard to find all kinds of coverage this week suggesting that Psystar is an out-and-out scam, but there is little proof to support that conclusion. Absence of detail is not proof of wrongdoing, though it does (and should) raise suspicions.

It seems that one way or another, we're getting closer to figuring out the true nature of Psystar's operation. I called PayPal again this morning to find out if it is behind the current outage, and if so, whether it will allow Psystar to resume business. I also checked in with Apple to see if it has assembled an army of lawyers yet, but I have yet to hear back.

[private user 2]

Devils advocate

Just to play devils advocate, it could be some guy working in his garage found could do this, and thought he could sell a few.

Obviously grossly underestimating the demand for a commodity priced Mac compatible, and now is scrambling to figure out what the heck he's going to do.

[Lee in San Diego]

You maybe right

Legality of selling the product not withstanding, they may have just
thought that they would only be shipping a few computers a week,
what they could build as the orders trickled in.

[Gromit801]

Or just maybe....

Psystar is a major flim-flam that is getting derailed because of so
much attention.

[Gromit801]

UPDATE

Gizmodo has some pretty damning evidence that it's a total scam:

http://gizmodo.com/380488/psystar-exposed-looks-like-a-
hoax

[pwptechrules]

Amazing

As a small gaming PC builder I am just amazed at what they are/were trying to do. I am based out of my home office. Even my site (pwptech.com) is secure. It does not cost that much. Not running AVS checking on an address is just stupid. They are either idiots (not knowing what they are doing?.. AT ALL) or fraud, but it has to be one of the two. I even try to take it to another level and use some other checking (I am not going to mention what) to try to prevent fraud. Something is really fishy. Apple does not need to sue them, Psystar is killing themselves. I am amazed that people were stupid enough to place an order on a site that was not secured. Better cancel those cards now!

[luismmolina]

Old news, we already now SCAM!!!!

Old news, we already now SCAM!!!!, you can read an investigation
in gizmodo...

[Tom Krazit]

Gizmodo's 'investigation' is not definitive

I'm not saying that Psystar is totally above board, but posting pictures of buildings that don't have a big Psystar logo is hardly proof that they are a scam. They're a new company, they might not have put up signs, and the person answering the phone at a neighboring company might not know all the companies that occupy a building.

Psystar brought all this scrutiny on itself with all the address changes and store outages, but I don't think Gizmodo's report is the smoking gun.

[J.G.]

There's no mystery

Psystar lacks a legal product to sell, so there is no way it can be
a legitimate merchant. Krazit should stop misleading readers by
implying otherwise.

[humanssssss]

Ummm...

"legal product" ... selling a computer is perfectly legal. I don't see why that's a problem.

Apple isn't going after Psystar and if they did, fck Apple. Psystar is doing everything legal. They bought the Mac OS, crappy software, in the open market.

Legality is for the government to decide. Not you nor any companies. Until this is taken to court, the product is legal.

[channelc]

Maybe Their Factory Was Abducted By Aliens!

It can happen! My uncle once told me that a place that he worked at was wiped off the map by creatures from outer space. in fact, they took the whole TOWN that it was in. And all the cows. Left nothing but crop circles.

[solitare_pax]

Well---

When you consider this is Florida - a state that can't even count votes for an election - should we really be so surprised?

[Lee in San Diego]

There is a reason

There is a reason Fark.com has a Florida tag. :)

I do graphic arts and in my opinion those ballots were poorly
designed. A number of studies were conducted, this is just one http://www.si.umich.edu/~presnick/BallotConfusion/

Then there is the question of the Florida Secretary of State at the
time being co-chair of Bush's Florida campaign.

But this is not about stolen elections, it is about stolen intellectual property.

[chuckjuhl]

Was up a few minutes ago and taking orders

I just went to their website and they were up and taking orders - at least as of 6 PM PST.

Looks like Credit Card Processing working too.

[Lee in San Diego]

So you bought some?

n/t

[MCOjerry]

I find it funny...

...that so many people hate Apple, but they want the OS. Sounds
hypocritical to me.

[chuckjuhl]

Not Really

Sometimes bad people make good things. Hitler made great tanks and airplanes :)

[jjesusfreak01]

OSX

No one said there was anything wrong with OSX, but there is something wrong with Apple. They write a good niche operating system, pair it with high end hardware, and then raise the price to crazy ridiculous levels. Their scheme only works so long as no other companies put osx on systems, because then everyone would realize how badly they were being ripped off.

[chuckjuhl]

BTW

I am typing on a darn PDA/Phone (ATT 8125) - give me a break on the spelling and grammer :)

[orionmgomg]

There's no profit for them anyway!

With the list price and the known going rate of the hardware they are packaging, they will be lucky to make any profit after factoring in Time and Materials, there is just nothing left...

And with any instant growth, double the operating expenses, on a questionable product - you got to be crazy to try to grow - you make too much money and the lawyers will eat you, you make no money and everyone laughs as you slowly suffocate, you stay the same, and you slowly die out anyway...

Their solution is not a miracle - newegg...??? Anyone...

I just want to know where they get that case, I'll make my own knock off, but instead I'll call it the "Apple Peeler!" LOL

[Lee in San Diego]

it isn't about the cost

No doubt there isn't much, if any, profit in selling the units at that
price, especially when you factor in the cost of OSX. They are
padding things a bit with the high shipping cost. Either that or the
hardware is crappier than most cheap clones.

I am wondering if someone is more interested in busting Apple.
That Psyster is a front for someone else. Follow the money, follow
the money.