Search Salon

- - - - - - - - - - - -

Recently in Salon Technology

Code critic
John Lions wrote the first, and perhaps only, literary criticism of Unix, sparking one of open source's first legal battles.
By Rachel Chalmers
[11/30/99]

Technology: View from the top
The music man
MTVi's Nicholas Butterworth says he wants the audience to do the programming.
By Janelle Brown
[11/29/99]

The man who fell to mirth
David Bowie makes light of van Gogh's ear, Ziggy's future and sowing "creative wild oats" in a chat about Omikron.
By Janelle Brown
[11/24/99]

Review
A soul-sucking parallel world
Will you free the residents of Omikron's totalitarian regime or lose yourself in the beauty of this game's futuristic city?
By Janelle Brown
[11/24/99]

Swords, spells and Academy Awards?
Diablo II vies to be the first role-playing game to be sanctified by Hollywood.
By Jamais Cascio
[11/23/99]

Complete archives for Technology

- - - - - - - - - - - -

- - - - - - - - - - - -

- - - - - - - - - - - -

He claims that IEG's online revenues are substantially higher than the numbers quoted in the affidavits and denies that he ever ordered accounts to be overcharged. By Warshavsky's account, there were only two incidents of improper charges. Though he admits that they involved "several thousand" customers, he says that incorrect charges were reversed. According to Warshavsky, one of the two incidents involved Voyeurdorm.com, a site for which IEG handled some billing functions but did not manage or own.

However, Matt Fischer, a customer-service supervisor who gave an affidavit in the lawsuit, says that in the time he was at IEG -- January 1998 to August 1999 -- there were six or seven occasions on which calls to customer service jumped from an average of 300 to 900 a day. Another former customer-service employee, Megan Riley, confirmed that there was a wave of complaints about Voyeurdorm.com, but said that the problems were not isolated to that site.

Warshavsky discounts the stories of his former customer-service employees. "What you have are $7-an-hour telephone operators who don't understand the billing systems," said Warshavsky. "It's like talking to the pizza delivery person at Domino's." (In fact, IEG's operators earned more like $10 an hour, say several former employees.)

According to Warshavsky, any revenue spikes were the result of batch processing of credit cards. Fischer, however, said in his affidavit and confirmed in an interview that at the times when calls to customer service increased, the majority of the calls -- 75 percent -- involved customers complaining that their closed accounts had been re-activated and billed again.

Warshavsky maintains that IEG documents back up his account of the company's revenues. He said also that an outside audit, commissioned by IEG, proved that there were only two incidents of overcharging. He offered to provide those documents, but only under a nondisclosure agreement that would give IEG the right to approve any use of the information that came from the documents; Salon Technology did not agree to those terms.

Is it possible to go broke overestimating the public's appetite for pornography?

Despite the stories of bounced checks and bogus charges, that's still not clear. James Trujillo, the former IEG accountant, says that in his estimation IEG was profitable, despite mismanagement and cash shortfalls. But IEG's recent run of trouble probably means that the prospect of the company going public and giving investors a chance to put their money in online porn is no more than a distant memory.

It might be just as well. Perhaps Warshavsky's porn empire has received as much publicity as it has because there is something irresistible about the prospect of profiting from other people's sin. It comes as something of a refreshing shock to find that what goes on at our neighbors' computers is not as bad as we assume it must be. Perhaps it should come as less of a surprise -- Americans, after all, have always been fonder of financial sin than of any other kind.
salon.com | Dec. 1, 1999

- - - - - - - - - - - -

- - - - - - - - - - - -

  Get a printer-friendly version

  E-mail a friend about this article

  Backflip this article to find it again

- - - - - - - - - - - -

Search Salon