ZixIt Corporation Initiates Lawsuit Against Visa
DALLAS, Dec. 31 /PRNewswire/ -- ZixIt Corporation (Nasdaq: ZIXI) ("ZixIt") announced today that it has filed a lawsuit against Visa U.S.A., Inc. and Visa International Service Association (collectively "Visa") in state district court in Dallas. The suit alleges that Visa undertook a series of actions that interfered with ZixIt's business relationships and disparaged ZixIt, its products, its management, and its shareholders.
The suit alleges that Visa intentionally set out to destroy ZixIt's ability to market its ZixCharge Internet transaction authorization system, which competes against the MasterCard and Visa-owned Secure Electronic Transaction ("SET") system. ZixIt's suit alleges that within two days of learning about ZixIt's competitive technology, Visa initiated an attack against ZixIt.
The Visa actions were led by Visa's Vice President of Technology Research, Paul Guthrie. They included the posting of more than 400 messages, under at least seven aliases, on the Yahoo! ZixIt message board. These messages not only attacked ZixIt and ZixCharge -- but also promoted and recommended competitive companies in which Visa has substantial investment positions. Many of the postings were inaccurate, misleading, or absolutely false. The suit also alleges that, in addition to the messages, Visa was also working directly to discourage financial institutions from partnering with ZixIt.
David P. Cook, chief executive officer of ZixIt Corporation commented, "Visa's conduct in this matter has made a mockery of ethical and decent business practices. Their outrageous behavior has seriously damaged ZixIt and its shareholders."
The lawsuit, including exhibits, is available on the ZixIt home page at www.zixit.com.
Chronology Leading to Visa Lawsuit:
May 17, 1999 - ZixIt officials meet with MasterCard International and provide non-public details of the ZixCharge system, ZixIt's Internet transaction authorization system. MasterCard views ZixCharge as a competitor to the MasterCard and Visa-owned Secure Electronic Transaction ("SET") system.
May 19, 1999 - Visa begins a malicious campaign of posting anonymous messages on the Yahoo! ZixIt message board.
May 19, 1999 - November 22, 1999 - While ZixIt is negotiating business relationships with financial institutions, Visa posts more than 400 messages to the Yahoo! board -- averaging more than 3 per working day. The Yahoo! message board is widely read by ZixIt investors, potential investors, and potential ZixIt partners. It is the Internet equivalent of a specialized newspaper that is freely available to Internet users worldwide. At the same time, Visa is working to thwart ZixIt's marketing efforts to financial institutions. (See exhibit 4 on www.zixit.com/visa).
November 22, 1999 - After a lengthy investigation, including legal action by ZixIt to obtain information from Yahoo!, it is determined that Visa, acting under at least seven aliases, composed and transmitted the disparaging and intentionally harmful messages to the Yahoo! ZixIt message board. The aliases, such as "twenex," "stockerama," and "pluribus_unum" are designed to conceal the Visa involvement.
November 23, 1999 - ZixIt sends a letter to Visa demanding, among other things, that Visa cease the egregious conduct. The postings under the known aliases stopped this day. (See exhibit 2 on www.zixit.com/visa).
December 6, 1999 - Visa responds to ZixIt's letter with a single-page fax admitting that Guthrie was involved, but failing to directly accept responsibility, stating instead that the "use of aliases ... would have prevented anyone from associating [the postings] with Visa." (See exhibit 3 on www.zixit.com/visa).
November 23, 1999 - December 31, 1999 - Visa permits the damage to continue by failing to take even the simple remedial action of having the messages removed from the Yahoo! Internet message board.
December 17, 1999 - ZixIt receives an email message from a prospective financial institution partner. The email message indicates that the financial institution had "talked with two people at Visa" and that there were "Visa objections" regarding a proposed arrangement with ZixIt.
December 31, 1999 - ZixIt announces suit. (See Original Petition on www.zixit.com/visa).
Visa Message Postings:
A small sample of Visa quotes from the message board is shown below. All 400+ postings may be viewed on our Web site. (See exhibit 4 on www.zixit.com/visa).
Visa Quotes Regarding the ZixCharge System & SET:
"I have talked to both FI's [financial institutions] and merchants about ZixCharge."
"I am the person that top FI's [financial institutions] call to look at things like [ZixIt]"
" ... future credit card needing [digital signature] is also a decision of the credit card companies and not [ZixIt]. They [Visa and MasterCard] have their own system [SET] that is competitive to [ZixIt's] and therefore would never standardize on [ZixIt]'s."
"none of these financial institutions who [ZixIt] is so dependent on will touch them."
"SET is now been put forward as the solution, and is ready to go (look at www.setco.org for the status). When the fraud rates are high enough, the credit card companies, banks and merchants will demand SET."
"[ZixCharge is] a solution around something that customers don't care that much about (giving up personal info to merchants)"
"ZixCharge is DOA. Shorts, we've got a great one here."
"[ZixCharge has] no chance of success."
"Everything [ZixIt] has presented has been done well by someone else, and in many cases for years by strong consortiums [SET] of industry players."
"[ZixIt] depends on FIs [financial institutions], but FIs have already made the choice to go elsewhere [SET]. Seems like a short to me."
"SET is taking off big time, mainly because of credit card co rules and pricing advantages that [ZixIt] won't get."
Visa Quotes Regarding ZixIt Corporation and ZixIt's Stock:
"[ZixIt] is dead."
"biggest POS [piece of sh*t] overpriced stock around."
"ZIXI stock will plummet on every announcement by the company."
"[ZixIt] is a bigger piece of Sh*t ... and should be flushed?"
"you shouldn't be investing in this stock."
"why those bastard brokers get away with it."
"sell it while you can"
"a clear short at this price."
"a sure way to financial ruin."
Visa Quotes Regarding ZixIt Management:
"[ZixIt management] is full of it"
"[Cook] was too busy smoking a big fat cigar and laughing his a** off at folks like you who've bought into this hype."
"[ZixIt] is the result of a big April fools joke by Cook, or perhaps the outcome of a three day tequila binge and drunken-bet payoff with Sanchez. [member of the ZixIt board of directors]"
"[ZixIt management] pimped themselves to the US government"
Visa Quotes Regarding ZixIt Shareholders:
"white trash", "a fat liar", "Stupid", "inbred West Virginia hillbillies."
"clueless bastard", "fool", "miserable coward", "idiot"
"unbalanced", "go back to beating your wife"
Visa Quotes Regarding Brokerage Analysts Favorable to ZixIt Corporation:
"I do think [brokerage analyst name deleted] is one of the best analysts in the industry, but ... I couldn't believe how bad a job he has done [on ZixIt] ... he has completely lowered his quality. I don't know if that includes "kissing ass" ... I think his quality has suffered noticeably."
The complete list of message postings that have been found to-date and the full text of the lawsuit, including exhibits, are available through the ZixIt home page at www.zixit.com.
ZixIt Corporation is the developer and owner of ZixIt(TM) Digital Signature and encryption technology. Products currently under development include: ZixMail(TM), a secure Internet-messaging system; and ZixCharge(TM), an Internet transaction authorization system. For further investor information about ZixIt, visit the company's Web sit at www.zixit.com or contact investor relations at 972-702-7057.
SOURCE ZixIt Corporation
CONTACT: Beverly V. Fuortes of ZixIt Corporation, 972-702-7057, or email, email@example.com; or press, John Crowe of Public Strategies, Inc., 512-474-8848, or email, firstname.lastname@example.org, for ZixIt Corporation/