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AllofMP3 Threatens Legal Action Against Visa and MasterCard
October 19, 2006
Thomas Mennecke
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AllofMP3.com has become the new media focal point for online music distribution. The key question is whether AllofMP3.com’s methods for online music distribution are legal. Thus far, AllofMP3.com appears to have achieved de facto legality, considering the Russian government's inability to comply with the RIAA and IFPI's request to shut the gray market music site down.

Realizing that little was being accomplished via the Russian government, the IFPI took the clever step of striking AllofMP3 at its financial revenue source - credit card payments. According to Ars Technica, the IFPI lobbied Visa to reject payments from AllofMP3.com. The plan worked, and according to an IFPI spokesperson, the plug was pulled in early September.

"IFPI drew to Visa's attention the fact that allofmp3.com was not licensed by its members," the spokesman told Ars Technica. "Visa has a policy position of not supporting such sites and had its facilities removed accordingly. In fact, the facility was removed in early September."

If this is the case, AllofMP3.com has remained quiet on the issue. Only since Wednesday has news of Visa's cutoff surfaced. And today, AllofMP3.com has resumed its public relations blitz, claiming Visa and MasterCard's decision to discontinue its relationship has no legal justification.

"The company believes the action taken by the world’s largest payment processors is arbitrary, capricious and discriminatory because Visa and MasterCard lack the authority to adjudicate the legality of AllofMP3’s activities and its determination that the company’s activities were illegal is patently erroneous and without legal merit. AllofMP3 has not been found by any court in the world to be in violation of any law."

Hinting at the IFPI's lobbying of Visa and MasterCard, AllofMP3.com continued by stating that Visa and MasterCard have no right to reject the Russian music store based on the interpretation of a non-legal entity.

"It is evident that Visa and MasterCard made the decision on factors other than legal grounds since the decision was not based on an adjudicated verdict by any court in the Russian Federation or, for that matter, anywhere in the world. To disqualify AllofMP3 based on a payment processing company’s whim is irresponsible and sets a bad precedence."

What's next? AllofMP3.com is not taking this situation lightly. It threatens the existence of their business model, as the reported DRM/adware option would surely spell the end of AllofMP3.com. Its likely AllofMP3.com will first attempt to settle its banishment from Visa and MasterCard through appeal. If they fail, then a legal battle is certain to erupt.

"AllofMP3 will pursue every course of action, including legal options, to reverse Visa’s and MasterCard’s decision."

This story is filed in these Slyck News categories
Legal/Courtroom :: Other Lawsuits
Unauthorized Distribution :: AllOfMP3.com

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