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Restaurant gets haul; Y2K error gets blame
The overcharges, to be refunded, are a reminder for people to double-check financial statements
Thursday, January 13, 2000
By Steve Woodward of The Oregonian staff
Ty Wells is $38,466.69 richer than he ought to be. But he's not happy about it.
Wells is the chef and owner of Alessandro's Italian Restaurant and Bar in downtown Portland. The $38,466.69 is the amount of overcharges inadvertently paid to him by 126 of his customers since Jan. 1. The culprit: a Y2K-related software glitch.
"I spent five years building this restaurant from nothing," Wells lamented Wednesday. "I don't want my reputation to be screwed up." Wells is among hundreds of merchants nationwide who have been hit by problems with outdated versions of card-swipe software known as ICVerify, made by CyberCash Inc. of Reston, Va. Although Wells had installed a Y2K-compliant version, a glitch caused his cash register to use the old version.
Moreover, the incident serves as a reminder for consumers to double-check financial statements in the coming weeks, as nagging year 2000 computer problems surface. The software-maker and credit-card-processing companies issued assurances last week that all duplicate transactions would be caught and fixed On Tuesday, $130 was deducted again -- and again on each business day through Monday this week. She discovered the missing money when she called the bank to verify her account balance before writing the monthly mortgage check.
She's now waiting for U.S. Bank to resolve the discrepancy through its normal customer dispute process. To prevent overdrafts, the bank has extended provisional credit to Venezia until the problem is solved.
Meanwhile, U.S. Bank and other banks nationwide have scrambled to identify and notify merchant customers who use outdated ICVerify software.
CyberCash, banks and credit card companies say the problem is not widespread. U.S. Bank, for example, found fewer than 150 affected merchants nationwide. Wells Fargo Bank identified 130 merchants in 21 states, including four in Oregon.
Thousands of credit- and debit-card holders who spent money with those merchants may be affected. Wells Fargo, for example, said 800 of its 4 million credit-card holders and 7,000 of its more than 6 million debit-card holders may be affected.
Though the numbers are relatively small, the banks have no easy way to determine which customers are victims of the glitch. So the banks are forced to wait until customers bring the duplicate transactions to their attention.
"What we're doing is erring on the side of the customer," said Tom Unger, a Wells Fargo Bank spokesman in Portland.
To forestall future problems, banks are severing credit- and debit-card relationships with the few remaining merchants who have failed to upgrade their ICVerify software.
"All known affected merchants have been cut off," said Samantha Levine, a spokeswoman for U.S. Bancorp at its Minneapolis headquarters. "Once we have verified that their terminal is working properly, we turn them back on."
Last year, Alessandro's vendor, Portland Cash Register Systems, had upgraded the restaurant's computer systems, including the latest Y2K-compliant version of ICVerify. But the older, noncompliant software, for reasons unknown, was not deleted during the upgrade. When the year rolled over, the cash register continued to use the older version of the $12,000 software.
"It's just unfortunate that the problem wasn't evident the very first day," said Richard Johnson, general manager of Portland Cash Register. "Ty is the one customer we've heard from who had serious problems."
Alessandro's is the company's only client that uses ICVerify. Last week, CyberCash spokeswoman Sydney Rubin said the problem was limited to merchants who failed to upgrade their systems. She was not available for comment Wednesday.
Meanwhile, Alessandro's Wells is eager for all $38,466.69 to be returned to his customers, who, he said, have been understanding. But now he worries that the banks will charge him the standard 1.67 percent fee for every duplicate credit and debit transaction.
"I need to talk to an attorney," he sighed.
-- Lee Maloney (email@example.com), January 14, 2000
Hey - A real one. This was an honest to God Y2K glitch that had negative impact on people. I am familiar with this as I am a Business Analyst with a large U.S. Bank. Mr. Wells need not worry about needing an Attorney. The banks should not charge him for the transactions. They will either write it off or collect the fees from the vendor who's software caused the error. Granted he may have been charged already and the banks will need to reimburse him the fees.
-- Lee Barrentine (Wrknman042legacy@aol.com), January 14, 2000.
Thanks for your good expertise, Lee.
I'm sure you join me in sending sympathies to merchants who have used non-compliant versions of ICVerify software. What a headache for bank execs who must sort out these Y2k glitches during the new year.
-- Lee Maloney (firstname.lastname@example.org), January 17, 2000.