Politics
President Barack Obama gestures toward a crowd. Photo: AP. President Barack Obama gestures toward a crowd. Photo: AP.  

Obama campaign collecting more donations from non-existent ZIP codes as campaign season goes on

Photo of Matthew Boyle
Matthew Boyle
Investigative Reporter

A soon to be released report from the conservative Government Accountability Institute shows that President Barack Obama’s re-election campaign has increasingly collected more electronic donations from non-existent ZIP codes throughout the 2012 campaign cycle.

From February through June this year the GAI findings reported that the Obama campaign collected $175,816.26 in electronic donations from non-existent ZIP codes. One month later, the campaign raised $411,369.55 through such donations and $197,464.59 in August.

By the end of September, the Obama campaign raked in $2,199,204.38 – thanks to donations from non-existent ZIP codes.

The upcoming GAI report suggests the Obama campaign is allowing fraudulent donations to be accepted because the president isn’t employing proper safeguards against fraudulent donations. GAI leaves open the possibility that the Obama campaign “may have experienced data-collection problems,” but argued “given the Obama campaign’s technological sophistication, the fact that the campaign consistently reports higher amounts of erroneous data month-to-month casts doubt on that explanation.”

“A robust anti-fraud address verification system (AVS) would require an accurate zip code to process a credit card transaction,” the report reads. “The presence of large sums of donations without such basic address information suggests that some campaigns are using looser security settings than others.”

GAI said an AVS system “compares the numerical portion of the address a donor enters to the numerical information on file with the credit card company for the card.”

“For example, most pay-at-the-pump gas stations require customers to enter their zip code,” GAI added. “Enter the wrong zip code or none at all, the transaction is denied.”

GAI said that when a political campaign uses such an AVS system, it’s “invisible to outsiders.”

“This makes it impossible to definitively know whether campaigns are using the AVS,” GAI wrote. “Complicating the issue is the fact that the AVS system has multiple settings that allow a campaign to loosen the system to accept more donations with suspect addresses or zip codes, or tighten it to block any donation that lacks a correctly entered address or zip code.”

Earlier this year – after reports surfaced alleging the campaign had disabled AVS and the Washington Examiner’s Michael Barone labeled such behavior, if true, “thuggish” – the Obama campaign claimed it does use proper donation security and fraud prevention tools.

“Credit card contributions to Obama for America are, in fact, processed using AVS (Address Verification System),” an Obama campaign spokesperson told the Election Law Blog in May 2012. “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.”

“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,” the Obama spokesperson added.

While the GAI report doesn’t prove either way – whether the campaign uses AVS or doesn’t – it does call into question how “robust” of a system the Obama campaign is using. GAI’s most recent report released in early October proves the Obama campaign has illegally solicited foreign donors and actively chose to ignore donation fraud prevention safeguards like Card Verification Value data – the input of a three or four digit number on the back of a credit card. Paired together, the two reports paint a picture of a presidential campaign that’s targeting illegal donations to fill the holes of what may be its fundraising failures.

The Obama campaign just borrowed $15 million from Bank of America – despite its public claims of fundraising prowess. As the Daily Caller reported earlier today, the Obama campaign was also caught accepting donations from British citizen Chris Walker, while Mitt Romney’s campaign site rejected the same donor due to mismatched zip codes.

According to the New York Post, “It is illegal to knowingly solicit or accept money from foreign citizens. Walker said he used his actual street address in England but entered Arkansas as his state with the Schenectady, NY, ZIP code of 12345.”

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