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Psystar still down as Powerpay explains its decision

The Mac clone maker lost its payment processor because of a sudden rush of orders and because it wasn't clear on exactly what it was selling.

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.

Psystar photos

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

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.


Lessons learned from the Psystar soap opera
It's been one rough week for the online retailer of Mac clones; there's a congressional vote for free broadband; the countdown starts for a pro-China Internet protest.
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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 site - currently, there are none."

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