Obama's Bogus Zip Code Fundraising Problem

Three weeks ago, I brought you a story about President Obama's illegal foreign campaign money loophole. As a refresher, President Obama's campaign donation website does not have basic, industry standard security measures to prevent fraud and foreign donations according to a report done by the Government Accountability Institute [GAI].

Now, GAI is out with a second report examining reported financial contribution data on the Federal Election Commission website and to "determine the effectiveness of campaign anti-fraud security tools in weeding out online donations made using incomplete or inaccurate zip code entries" for both the 2012 Romney and Obama campaign donation websites. The report also examined 2008 election cycle sites.

In order to prevent this type of fraud, campaigns install an AVS or address verification system on their donation sites to process credit card transactions. The latest GAI report shows "the presense of large sums of donations without such basic address information suggests that some campaigns are using looser security settings than others."

Although both the Romney and Obama campaigns showed fraud, GAI found the Obama campaign had a much higher amount.

-During calendar year 2012, the Obama campaign received at least $2,983,854.78 from donors who did not submit a zip code, or submitted one that do not exist.
-During calendar year 2012, the Romney campaign received at least $244,287.01 from donors who did not submit a zip code, or submitted one that do not exist.

-During calendar year 2008, the Obama campaign received at least $2,778,808.97 from donors who did not submit a zip code, or submitted one that do not exist.
-During calendar year 2008, the McCain campaign received at least $431,046.00 from donors who did not submit a zip code, or submitted one that do not exist.

Although it is impossible to tell from the outside whether a campaign is using AVS on its donation site, GAI examined how many donations were accepted by the campaigns with clearly erroneous zip codes based on FEC data. From the report:

We only selected data reported by the campaign as “no zip code was supplied,” zip codes with only four digits, zip codes reading all zeros, and five-digit zip codes which were non-existent. We also considered the refunds given by the campaigns to contributors with invalid zip codes.

Our study sought to determine the relative robustness of campaign AVS settings.

It should be noted that FEC filings only reflect contributors who have given more than $200. Thus, the actually number of total donations which don’t contain accurate zip code information is probably much higher.

Based on findings in GAI's first report and the findings here, it is clear the Obama campaign has major problems with donation security and potential fraud. Because of this, GAI recommends the following:

The Government Accountability Institute has called for campaigns to release the names of all campaign contributions, require donors to enter their credit card security code (CVV), and utilize a robust AVS to maintain the integrity of U.S. federal elections.