Serious questions linger about the Obama campaign organization’s ability to spot and prevent foreign donations to its current iteration, Organizing for Action (OFA).
The Government Accountability Institute (GAI), a watchdog group, released a report in September 2012 that stated the campaign was vulnerable to illegal donations from foreigners. The report criticized the Obama campaign’s lax security features on its donation web page.
The Obama campaign in 2012 did not appear to be using two industry-standard security features on its website, the Card Verification Value (CVV) and an Address Verification System (AVS), according to the report.
OFA’s donation page still does not require the CVV and it is unclear if the website checks the required address against the card number.
The report argued that not using these two tools exposed the campaign to at least two different kinds of fraud. One is the “Unintentional Fraudster” who does not know American election law and donates anyway. Another is the “Fraudulent High Dollar Donor(s)” who makes multiple smaller donations. Both CCV and AVS would prevent intentional and unintentional fraud.
“You really want to use the two in tandem,” said Peter Schweizer, president of GAI.
He said there were numerous instances of people donating under false names during the campaign, as well as anecdotal evidence of foreigners circumventing the law to donate.
He said the Obama campaign claimed to check manually donors on the back end of the donation process. This manual process conflicts with the campaign’s reputation for being technologically savvy, he noted.
Schweizer said OFA could give two arguments against using the CVV. It adds an extra step to the donating process, which “restricts the ease of use,” and it prevents “unbanked” individuals who do not have debit or credit cards from donating.
When asked if these arguments have any merit, Schweizer said, “Not really.”
He did say some studies have shown a drop-off in donations to organizations using the CVV. However, the GAI report also notes that credit card companies charge more when organizations do not have the fraud prevention systems.
He noted that several people the upper echelons of the Obama campaign have run businesses on the Internet, and the one outlier in terms of website security among these people is the Obama campaign.
Schweizer also noted that an address verification system does not make donating any more difficult.
OFA is organized as a 501(c)(4) nonprofit group, which means that donations to it are not tax deductible. This kind of nonprofit can legally receive unlimited donations from any person or group, including foreign entities, said multiple lawyers.
However, OFA pledged not to accept donations from corporations and foreign individuals or groups after the group came under fire for accepting donations from corporations and appearing to trade the money for access to the president. The group will still accept donations from labor unions.
OFA’s website asks donors to affirm that they are either U.S. citizens or permanent residents if they are individuals, and if they are organizations, that they are not foreign.
While there are no legal restrictions on the source of money going to this kind of nonprofit, the law sets very stringent restrictions on how this money may be used in elections.
The law prohibits 501(c)(4) organizations from using foreign money to engage in “electioneering activity,” said Tara Malloy, senior counsel at the Campaign Legal Center.
If the nonprofit engages in activity directly related to an election, then it would have to use segregated accounts for the money coming from foreign sources, she said.
OFA took over the domain name from the president’s campaign, barackobama.com, as well as the president’s twitter handle, @BarackObama. At least some tweets from the president’s account have targeted Republicans.
Malloy indicated that there is some controversy about whether this kind of partisan activity is election-related.
OFA is “a nonprofit organization established to support President Obama in achieving enactment of the national agenda Americans voted for on Election Day 2012,” according to its website.
There are few ways to enforce the law. Malloy called it “a game of trust,” where the nonprofits and campaigns bear the responsibility to enforce the law themselves.
She noted past concerns about the Chamber of Commerce’s election activities, where the Chamber was accused of using foreign donations to support its favored candidates.
Schweizer pointed out that political operatives from both political parties are not known for their honesty.
The Sunlight Foundation, another government oversight group, bemoaned the easy access that foreigners have into our political system.
“OFA’s announcement [that it will not accept corporate donations] is at least tacit acknowledgment that foreign money can easily find its way into our political process,” wrote Lisa Rosenberg, Sunlight’s government affairs consultant and a former legislative assistant to John Kerry.
An OFA spokeswoman did not return a request for comment on OFA’s online security system.
OFA has promised to disclose all donors who give more than $250, a less restrictive cutoff than the $200 limit the Federal Elections Commission requires from campaigns.
“I don't think American elections should be bankrolled by America's most powerful interests, or worse, by foreign entities,” President Barack Obama said in his 2010 State of the Union address. Applause followed.