Oh Pullease!! Credit Card Suit Defies Concept of Personal Responsibility

You've likely heard of the woman in California who has filed a cross-complaint against Visa and Mastercard when they sued her to recover losses on her credit card which were used to gamble online. Folks in the industry are interested to get the gory details about this incredible story. IGN has found the details of the suit and are passing them along to you.

Below is cross-complaint as it was files in California.

JOHN WARNER (sb# 46123)
Law offices of John Warner
21 Tamal Vista Blvd., Suite 196
Corte Madera, CA. 949256
Tel: (415) 924-2640

Attorneys for Defendant and Cross-complainant
CYNTHIA H. HAINES

SUPERIOR COURT FOR THE STATE OF CALIFORNIA

IN AND FOR THE COUNTY OF MARIN

PROVIDIAN NATIONAL BANK ) Case No. V980858
)
Plaintiff ) CROSS-COMPLAINT FOR
) RESTITUTION, DECLARATORY
vs. ) RELIEF AND INJUNCTIVE RELIEF
)
CYNTHIA H. HAINES )
DOES I through V ) UNFAIR BUSINESS PRACTICES
Defendants ) (B & PC 17200 ET SEQ.)
)
)
CYNTHIA H. HAINES, an ) CALIFORNIA FAIR DEBT PRACTICES
Individual, and on Behalf of ) ACT (CIVIL CODE 1788 ET SEQ.)
the General Public of the State )
of California: )
)
Cross-complainant )
Vs. )
)
VISA USA, Inc., a corporation; )
MASTERCARD INTERNATIONAL, INC., )
A corporation; PROVIDIAN )
NATIONAL BANK, A National )
Association: and ROES 1-100 )
Inclusive. )

Cross defendants

COMES NOW Cross-complainant, CYNTHIA H. HAINES, by and through her undersigned attorney, and for her Complaint For Restitution, Declaratory and Injunctive Relief, and damages on behalf of herself and on behalf of the General Public of the State of California, requests that this case be transferred to Superior Court, and states and alleges as follows:

INTRODUCTI ON

1. This is an action, on behalf of Cross-complainant and the General Public of the State of California, against VISA, INC. (hereafter “VISA”), MASTERCARD, INC. (hereafter “MASTERCARD”), and other credit and credit card companies and merchant banks, named as ROEs 1—5O herein, seeking to enjoin said companies from their participation in and profit—taking from illegal gambling on the internet. This claim is made under the California Unfair Business Practices Act - B & PC § 17200. As further discussed below, numerous offshore “online” gambling casinos, in exchange for a percentage (usually between 2% and 5% of the gross revenue charged) have formed agreements with VISA and MASTERCARD and their agents and Bank Affiliates to accept such credit cards over the internet and world wide web as a form of payment for illegal online gambling in the State of California.

2. There are very important public policy reasons why online gambling transactions are illegal, unfair and unenforceable, including the lack of online casino licensing and the total inability the online consumer to audit the integrity of the gambling software algorithm to make certain that the odds of winning are not unfairly altered in favor of the “online casino.”

3. VISA and MASTERCARD are both actively involved in e-commerce and knew or should have known of the numerous online casinos using their credit cards for illegal gambling transactions and VISA’s and MASTERCARD’S profiting from such transactions. Indeed, by merely typing a few words into popular search engines such as Yahoo, Excite!, and Infoseek, within minutes VISA and MASTERCARD can learn of numerous online casinos accepting VISA and MASTERCARD from residents of California. This law suit is designed to remedy that situation by obtaining an injunction against VISA and MASTERCARD from permitting their credit cards from being used or accepted on web sites that accept illegal bets from residents of the State of California.

4. This is also an action against PROVIDIAN NATIONAL BANK (hereafter “PROVIDIAN”) for violation of the California Fair Debt Practices Act (Civil Code §1788 et seq.) and the California Unfair Business Practices Act for failing to send the Cross-complainant documents proving the alleged debt and to show Cross-complainant’s authorization after Cross-complainant requested such information and voiced doubts about authorizing some or all of such illegal gambling transactions.

5. In addition, as further described below, PROVIDIAN cannot collect on a debt arising out of an illegal gambling transaction since such debt and transaction are void ab initio (void at the inception) as being against public policy in the State of California. Cross-complainant seeks both economic and non-economic damages and statutory damages from PROVIDIAN for violating the applicable provisions of the California Fair Debt Practices Act (Civil Code §1788 et seq.).

6. Gambling on the world-wide network of computers called the internet has become an immense and profitable business according to the opening statement of Chairman McCollum, made this year to the House Judiciary Crime Subcommittee On Internet gambling, on-line research analysts estimate that internet gambling will reach about $440 million by the end of 1998, and, if left unchecked, will soon become a $10 billion a year industry.

7. Gambling for money on the internet by consumers is provided through the world wide web, a graphical user interface on the internet. At the casino—style gambling sites on the internet, the general public can engage in real gambling, for real money, at “virtual casinos” offering realistic computer-generated graphical renditions of card games, roulette wheels, and other forms of casino-style gambling, as well as sports event betting. The user interacts with online casino’s software Interface through a web browser and/or downloadable software Located on the user’s own computer. Payment by consumers for anticipation in internet gambling is generally performed by the use of credit cards and credit card accounts, such as those provided by Cross-defendants VISA and MASTERCARD.

8. Most of the on-line internet gambling casinos are operated from off-shore locales, such as the Caribbean or Costa Rica, where they are generally free from any state or federal regulation or oversight. As a result, most of the internet gambling casinos are unrestrained from offering and providing gambling to minors, to individuals for whom (because of their residence and location) gambling is illegal, and to the victims of gambling addictions. In addition, the on-line gambling casinos are generally free to use unchecked computer algorithms, potentially biased against and unfair to the gambling consumer, and to make unauthorized charges against consumers’ credit card accounts.

9. Illegal and unfair internet gambling is only made possible by the cooperation and participation of credit card companies, such as VISA and MASTERCARD. Without the ability to transfer funds electronically through the use of credit cards, on information and belief, most if not all of the internet gambling casinos would have to cease business.

10. In late 1997. the attorney general of the State of Florida obtained the cooperation of Western Union in refraining from providing transfers of funds to offshore internet gambling casinos used illegally by Florida residents. Yet, on information and belief, credit card companies, such as VISA and MASTERCARD, have not been willing to curtail their participation and profit— taking from illegal internet gambling by discontinuing the transfer of funds to foreign internet gambling casinos, or by closing such casinos’ merchant accounts.

PRELIMINARY ALLEGATIONS

11. Cross-complainant incorporates by reference all of the allegations contained in the preceding paragraphs of this Complaint as if the same were set out at length herein.

12. Cross-complainant, CYNTHIA H. HAINES, (hereafter “HAINES”) at all times relevant herein, is and was an individual and a resident of the County of Marin, State of California. HAINES also brings this action on behalf of the General Public of the State of California. All alleged online gambling transactions occurred through a web browser while cross—complainant was located in Mann County. California. HAINES entered both VISA and MASTERCARD credit card numbers through her web browser in online gambling transactions alleged in this cross-complaint.

13. Cross—defendant VISA USA, INC. (hereinafter “VISA”), at all times relevant herein, is and was a corporation with its main of f ice in Foster City, California, doing business in the County of Marin and the State of California. Cross—defendant VISA, at all times relevant herein, is and was in the business of providing credit account and credit card services to consumers and businesses throughout the State of California, the United States and abroad.

14. Cross-defendant MASTERCARD INTERNATIONAL, INC. (hereinafter “MASTERCARD”), at all times relevant herein, is and was a foreign corporation, doing business in the County of Marin and the State of California. Cross-defendant MASTERCARD, at all times relevant herein, is and was in the business of providing credit account and credit card services to consumers businesses throughout the State of California, the United States and abroad.

15. Cross-defendant PROVIDIAN NATIONAL BANK (hereinafter “PROVIDIAN”), is a National Association organized under the laws of the United States and is currently doing business in the State
of California and provided cross—complainant with a VISA card.

16. Cross-complainant does not know the true names of Cross-defendants ROES 1 through 100, inclusive, and therefore sues them by those fictitious names. Cross-complainant reserves the right to amend this complaint, if necessary or desired, to show their true names and capacities when they have been ascertained.

17. On information and belief, ROES 1—50 at all times relevant herein, were and are in the business of providing credit card accounts and credit card services throughout the State of California, the United States and abroad. On information and belief, at all times relevant herein, ROES 1-50, inclusive, and each of them, did business in the County of Marin, State of California and adversely impacted persons located in California.

18. On information and belief, ROES 51-100, inclusive, and each of them, at all times relevant herein, were and are online gambling casinos or merchant account holders for such casinos, who accepted bets via a web site via VISA and/or MASTERCARD credit cards from HAINES and persons located in California.

19. On information and belief, at all times mentioned herein, each and every Cross—defendant and ROE Cross-defendant was the agent, employee, servant, partner, franchise or joint venturer of each of his or her co-Cross-defendants, and in doing the actions described below was acting within the scope of his or her authority in such agency, employment, service, partnership, franchise and joint venture and with the permission and consent of each co—Cross—defendant.

(Violations of California Business and Professions Code § 17200 et seq.)

20. Cross—complainant incorporates by reference into this cause of action all of the allegations contained in the preceding paragraphs of this Complaint as if the same were set out at length herein.

21. On or about January, 1997 through June, 1998, Cross-complainant and other members of the general public, while in the State of California, engaged in gambling for money on the internet, at various foreign and off-shore internet gambling casinos operated by ROES 51-100, inclusive, and each of them, incurring substantial gambling debts.

22. Cross-complainant and, on information and belief, members of the general public of the State of California, were induced by some of the online casinos into believing that such online gambling was not illegal in the State of California. Cross-complainant was wrongfully led to believe by some of the offshore online casinos that since the offshore casino’s web server was located outside the United States such online gambling was lawful even if the online gambler was located in California when participating in an online gambling transaction. Other online casinos were merely silent on the issue of lawfulness of such online gambling in the USA and California or buried any warning of illegality in such a manner that a reasonable consumer would not be able to read it or be put on notice of it.

23. On or about January, 1997 through June, 1998, Cross-complainant, while in the County of Marin, State of California, and by using her VISA and MASTERCARD credit cards, including possibly to some extent the PROVIDIAN VISA card, engaged in gambling for money on the internet, at internet gambling casinos operated by ROES 51-100, inclusive, and each of them, incurring gambling debts in excess of $70,000 dollars. Such gambling transactions took place through the web sites operated by ROES 51—100 via a web browser operated by Cross-complainant in her residence in Marin County, California.

24. ROES 51-100, inclusive, and each of them, operated, at all times relevant herein, and continue to operate through the present time, various foreign and off-shore internet gambling casinos, under various names on the internet, including, but not limited to, Intercasino, Casino Fortune, Acropolis Casino, Casino Royale, Cyberthrill Casino, Fallon Casino, Island Casino, Casino of the South Pacific, Real Casino, Grand Dominican Casino, and other names. Cross-complainant will ask this court for leave to amend once it can be discerned the true names of the real parties in interest.

25. The aforementioned Internet gambling casinos, and each of them, at all times relevant herein, operated, and continues to operate through the present time, outside of the regulation of any state and of the United States of America. On information and belief, some of the aforementioned gambling casinos, at all times relevant herein, used and continue to use computer algorithms for the gambling services provided to consumers, including Cross-complainant herein members of the general public within the State of California, that are biased toward the gambling casinos, and that are unfair to consumers and/or are not easily audited by consumers for fairness.

26. On information and belief, some of the said aforementioned gambling casinos, at all times relevant herein, have made, and continue to make, unauthorized credit account charges to the credit card accounts of Cross-complainant and other members of the general public within the State of California.

27. ROES 51-100, and each of them, on information and belief, at all times relevant herein, operated, and continue to operate through the present time, their internet gambling casinos, with the knowledge, cooperation, consent, authorization and participation of Cross-defendants VISA, MASTERCARD, and ROES 1-SO, inclusive, and each of them.

28. Cross-defendants VISA, MASTERCARD, and ROES 1-50, inclusive, and each of them, on information and belief, at all times relevant herein, knowingly provided, and continue to provide through the present time, credit and credit card accounts, and consumer credit card payments for gambling debts to internet gambling casinos ROES 51—100, inclusive, and each of them

29. At all times relevant herein, Cross-defendants VISA, MASTERCARD, and ROES 1-50, inclusive, and each of them, profited, and continue to profit through the present time, from internet gambling conducted at the internet gambling casinos of ROES 51-100, inclusive, and each of them, by Cross-complainant herein, and by other members of the general public within the State of California. On information and belief, Cross-defendants VISA, MASTERCARD, and ROES 1-SO, inclusive, and each of them, profited, and continue to profit through the present time, from internet gambling by, among other ways, charging and receiving credit card and credit account charges and commissions from the aforementioned internet gambling casinos, from gambling by Cross- complainant and members of the general public while in the State of California.

30. At all times relevant herein, Cross-defendants VISA, MASTERCARD, and ROES 1-50, inclusive, and each of them, provided, and continue to provide through the present time, the aforementioned internet gambling casinos their major source of income by allowing such online casinos to accept such credit cards from persons located in California on the casino’s world wide web sites and then by making the charge proceeds (minus VISA’s and MASTERCARD’s percentage payment) available to the internet gambling casinos.

31. But for the cooperation, assistance, consent, and authorization of Cross-defendants VISA, MASTERCARD, and ROES 1- 50, inclusive, and each of them, and the acts of said Cross- defendants described herein, the aforementioned internet gambling casinos would have been, and would be, presently and in the future, unable to maintain and operate the aforementioned internet gambling businesses and activities with Cross- complainant and members of the general public within the State of California.

32. The above-described conduct of all of the Cross-defendants named in this complaint, and each of them were, and presently are, on information and belief, being engaged in knowingly by each of said Cross-defendants, and occurred, and are presently occurring, through the knowing use of a wire communication facility by each of said Cross-defendants for the transmission in interstate and foreign commerce of bets or wagers, arid of information assisting in the placing of bets or wagers, in violation of 18 U.S.C. § 1084.

33. The above—described conduct of the Cross-defendants, and each of them, is continuing through the present as an ongoing business enterprise.

34. The above-described conduct of the Cross-defendants, and each of them, was at all times relevant herein, and is currently, in violation of the laws of the State of California and the United States of America, including, but not limited to, in violation of California Penal Code § 330 (gaming) and California Penal Code § 337a (bookmaking or pool selling); and 18 U.S.C. § 1084 (transmission of wagering information); and other laws of the State of California and the United States of America.

35. The above—described conduct of the Cross—defendants, and each of them, did and ROEs constitute unfair, fraudulent and unlawful business practices, in violation of California Business and Professions Code § 17200 et seq.

36. As a direct and proximate result of the above-describe conduct of all of the Cross-defendants, and each of them, the Cross-defendants have received and continue to receive substantial ill—gotten funds, in violation of the laws of the State of California and the United States, that rightfully belong to members of general public who have been adversely affected by Cross-defendants’, and each of their, conduct. Said ill-gotten funds are in an amount to be proven at trial, but are in excess of the minimum jurisdiction of this court.

37. As a direct and proximate result of the above-describe conduct of all of the Cross-defendants, and each of them, the Cross-defendants have received in excess of $70,000.00, in violation of the laws of the State of California and the United States, that rightfully belongs to Cross—complainant herein. Said amount of ill-gotten gains are in an amount to be proven at trial, but are in excess of the minimum jurisdiction of this court.

38. Upon information and belief, Cross-defendants, and each of them, by the conduct described above, have engaged and are engaging in business practices which offend established public policy, and are immoral, unethical, oppressive, unscrupulous and substantially injurious to consumers, including, but not limited to the Cross-complainant herein and the general public in State of California.

39. Cross—defendants’, and each of their, continuing wrongful conduct as alleged above, unless and until restrained by order of this court will cause great arid irreparable harm to Cross-complainant and to the public at large.

40. Cross-complainant and the public at large have not adequate remedy at law for the injuries currently being suffered or which will result in the future from the Cross-defendants’, and each of their, continued wrongful conduct unless and until such conduct is restrained by order of this court.

41. The enforcement of the right of the general public, including but not limited to consumers within the State of California, and the Cross—complainant herein, to be free from the harm of the unfair and unlawful business practices of the Cross-defendants, and each of them, is a significant benefit. The necessity and financial burden of the Cross-complainant in enforcing this right make an award of attorneys’ fees appropriate, and it would not be in the interests of justice that such fees should be paid out of Cross-complainant’s recovery if any. Therefore, an award of attorneys’ fees, pursuant to California Code of Civil Procedure § 1021.5 and a “Private Attorney General” theory is warranted, and is appropriate in this case.

SECOND CAUSE OF ACTION

(Restitution Against Cross-defendants

PROVIDIAN and ROES 51-100)

41. Plaintiff incorporates by reference into this cause of action all of the allegations contained in the preceding paragraphs of this complaint as if the same were set out at length herein.

42. Any sums paid by cross—complainant to cross-defendants Providian National Bank arid ROES 51-100 were based upon illegal internet gambling activities facilitated by these cross-defendants Such internet gambling activities are void ab initio under California law and additionally they constitute an unfair business practice outlawed by the California Unfair Business Practices Act, Business and Professions Code §17200 et seq.

43. As a proximate result of said void and illegal internet gambling activities, cross—complainant is entitled to restitution from cross-defendants PROVIDIAN and ROES 51—100 of all monies that she has previously paid to these cross-defendants, including interest thereon at the legal rate.

THIRD CAUSE OF ACTION

(Declaratory Relief as to all Cross-defendants)

50. Plaintiff incorporates by reference into this cause of action all of the allegations contained in the preceding paragraphs of this complaint as if the same were set out at length herein.

51. As alleged in this cross-complaint, internet casino-style gambling is a growing and lucrative business activity with direct impact upon all of the citizens of the State of California who have the potential of using the internet to purchase consumer goods and services. Cross-complainant contends that such internet casino-style gambling directed to persons such as cross- complainant residing and located in the State of California is a form of gambling in the State of California which is illegal, and which violates the California Unfair Business Practices Act.

52. Therefore, an actual and present controversy exists between cross—complainant and cross-defendants concerning the legality of and the carrying on of internet casino-style gambling in the State of California and the related debt collection efforts.

53. For these reasons, cross-complainant seeks a declaration of this court that such internet gambling transactions and collection efforts carried on by cross- defendants, and each of them, are illegal and are an unfair business practice carried on by these cross—defendants to deliberately evade the laws of the State of California which explicitly prohibit any form of gambling in the State of California and which deems such debts to be unenforceable.

FOURTH CAUSE OF ACTION

(Damages for Violation of Fair Debt Collection Act

as to Cross-defendant Providian National Bank Only)

54. Plaintiff incorporates by reference into this cause of action all of the allegations contained in the preceding paragraphs of this complaint as if the same were set out at length herein.

55. On or about March 1998 cross-complainant, through her attorney, communicated in writing to PROVIDIAN that the credit card charges claimed by PROVIDIAN in its billing statements sent to cross-complainant were either not authorized by cross-complainant or not supportable in law. Cross-complainant through her attorney also informed PROVIDIAN that to the extent that any of the credit card charges arose out of internet gambling, such transactions were void ab initio and any such debts were unenforceable. In that communication, cross-complainant’s attorney requested that cross-defendant provide written documentation to support its claim, to remove the debt from cross-complainant’s credit card report, to zero out her account balance with cross—defendant, and to make any other adjustments in cross-complainant’s account with cross—defendant so that cross-complainant would not be exposed to any liability or uncreditworthiness in connection with any such illegal internet gambling activities.

56. Cross-defendant knowingly and willfully failed to respond to cross—complainant’s request that she not be held liable for or reported as uncreditworthy in connection with said illegal internet gambling activities. Cross—defendant, instead of providing the reasonable information regarding the alleged debt as requested by Cross-Complainant, instead waited about three months and knowingly and willfully continued to collect on the debt by filing the underlying complaint for $4,973.35 against the cross-complainant.

57. As a proximate result of the activities of cross-defendant to continue to enforce this void debt and to refuse to respond to cross—complainant’s demands that cross-defendant cease and desist its collection efforts and to provide verification of the debt and to prove authorization of the debt, cross—defendant has violated the California pair Debt Collection Practices Act (Civil Code §1780 et seq.).

58. As a further proximate result of such conduct by cross-defendant, cross-complainant has suffered both economic and non-economic damages and her creditworthiness has been impaired. Sucir intentional violations of the California Fair Debt Collection Practices Act and the outrageous course of conduct of cross-defendants, support an award of Punitive Damages pursuant to the Act and laws of the State of California.

PRAYER FOR RELIEF

WHEREFORE, Cross-complainant prays for judgment as set forth below:
1. For a permanent injunction, against cross-defendants, each of them, as follows:

Enjoining Cross-defendants VISA, MASTERCAPD, and ROES 1-50 , and each of them, from providing credit card merchant accounts to internet gambling casinos that provide gambling services to individuals located within the State of California.

b. Enjoining Cross-defendants VISA, MASTERCARD, and ROES 1-50 , and each of them, from allowing internet gambling casinos doing business in California from accepting VISA and MASTERCARD on their web site or through other means.

c. Enjoining Cross-defendants VISA and MASTERCARD from allowing the following web site casinos, from accepting VISA and MAST~KCARD on their web site or through other means: Intercasino, Casino Fortune, Acropolis Casino, Casino Royale, Cyberthrill Casino, Fallon Casino, Island Casino, Casino of the South Pacific, Real Casino, and Grand Dominican Casino.

d. Enjoining PROVIDIAN from charging, assessing, collecting or attempting to collect, from HAINES any debts and charges incurred by her for internet gambling transactions that occurred in California.

2. For attorneys’ fees against all cross—defendants, pursuant to CCP § 1021.5. and a “Private Attorney General” basis.

3. For a declaration that all alleged online gambling contracts or transactions entered into by Cross-complainant in California are void ab initio.

4. For a declaration that all or part of the debts alleged in PROVIDIAN’s complaint were not authorized by HAINES.

5. For general, special, compensatory, and consequential damages against PROVIDIAN.

6. For Restitution against PROVIDIAN and ROES 51-100.

7. For an amount equal to the unjust enrichment of PROVIDIAN and ROES 51-100.

8. For Punitive Damages against PROVIDIAN for their willful, outrageous, and intentional statutory violation.

9. For Attorneys fees against PROVIDIAN pursuant to statute and the contract alleged and attached to PROVIDIAN’s complaint.

10. For statutory damages against PROVIDIAN pursuant to the California Fair Debt Collection Practices Act.

For the costs of this suit.

For such other and further relief as the court deems just and appropriate.

DATED: July 23, 1998
THE ROTHKEN LAW FIPN

By:___
Ira P. Rothken, Esq.
Attorney for cross-complainant
CYNTHIA H. HAINES