SOURCE: Neovi, Inc.

August 28, 2007 16:07 ET

Qchex by Neovi -- An Innovative Solution for Consumers vs. the FTC

SAN DIEGO, CA--(Marketwire - August 28, 2007) - Neovi Data Corporation announces the restructuring of Qchex, an online check delivery service. The idea behind Qchex is compelling and simple -- provide users the ability to enter bank account information on a secure web site and send paper checks that can be printed remotely at the destination point by a recipient's printer. Users can alternatively opt for the Qchex US Post mail service to mail checks for convenient delivery to the recipient's mailing address.

Qchex: A Service that Can Save Consumers Billions

Convenience and cost savings led to quick growth in Qchex popularity. Users can experience one of the fastest and most economical ways to create and deliver paper documents such as checks anywhere a payment is owed. Banks maintain responsibility to confirm and verify funds, validate ID and use a private network for settlement and fund transfers. Qchex is not a bank nor involved in fund transfers and has no access to activity or account status information.

With over 40 billion US check transactions annually, sending paper checks directly to recipient desktop printers saves postage, delivery service costs, expensive wire transfer fees, and late charges. Consumers and businesses could save billions while reducing environmental impact.

Consumers Challenge the System

Numerous consumers are involved in disputes related to check payments every year. Often the consumers become victims of their own greed, carelessness or fraudulent schemes. Some consumers were affected negatively from Qchex users and blamed Qchex -- per the Federal Trade Commission (FTC).

Every year millions of counterfeit, fraudulent and disputed checks enter the banking system from a myriad of sources. Qchex made it easy for banks to recognize checks created with the service by printing its mark on each document. Banks complained to the Federal Deposit Insurance Corporation (FDIC) about losses caused by cashing fraudulent checks created by Qchex software users. Qchex was blamed for actions of its users abusing the system and banks irresponsibly cashing checks created by Qchex software users. A public campaign was initiated.

Federal Trade Commission (FTC) Seeks Precedent

After the FDIC had started its campaign, the FTC took action and forwarded a demand letter to Qchex to sign a drafted Order. In the Company's view the Order was designed to force Qchex into:

  a) essentially censoring its users
  b) systematically disclosing user information and ID for validation
     by third parties
  c) archiving all activity information and records of private user data
     for inspection by third parties
  d) being held liable for actions of future users

Qchex considered the FTC demands unacceptable as directed against a mere software service operating at the discretion of its users -- not essentially different from email or search engine providers. Qchex did not agree to burden and expose its users nor sign a precedent setting court order with unknown -- likely damaging -- consequences for consumers. It could cause a liability shift on software makers and service providers being held liable for actions of their users. The basis for "liability justice" in general could change.

"Consider this hypothetical scenario," says Thomas Villwock: "The bank robber created his plan using Google and free Yahoo email. Printed directions with an HP laser connected to a Dell PC running Windows. Shot the guard with a large caliber Smith &Wesson. Killed 50 passengers in a Volvo bus crashing into a freeway bridge, while outrunning the police in a Corvette... etc. -- who is liable?"

Qchex Rejects FTC Demand

Upon Qchex refusal to sign, a lawsuit was filed to press Qchex into the FTC's demands. The Federal Court denied the FTC's motion for preliminary injunction against the defendants, cancelled the temporary restraining order that was briefly in place and stated that the FTC's case is likely to fail.

To restructure, Neovi has halted Qchex operation. In parallel the company is offering the underlying technology platform to third parties for licensing, sale or merger. For inquiries please contact:

The company is nevertheless determined to continue defending its service, consumers and businesses from what appears to be an attempt to regulate information exchange over the Internet. More importantly, the FTC initiative could help transfer liability for the consumer's own technology assisted actions to the technology maker.

Thomas Villwock, Physicist & Entrepreneur and James Danforth, CFO apologize for any inconvenience associated with the restructuring. They welcome any support, constructive comments and suggestions from consumers or businesses and invite them to keep updated on new events and progress. For more information and comments please go to:

Contact Information