April 17, 2008 10:40 AM PDT

Psystar violated terms of merchant services agreement

Posted by Tom Krazit

The payment-processing merchant for Mac clone maker Psystar abruptly ended its relationship with the company Wednesday after it discovered what was for sale on Psystar's site.

Powerpay refused to process any more transactions for the Open Computer after learning what it was.

(Credit: Psystar)

Powerpay had been the payment processor for Psystar's online store until Wednesday, when it yanked its services from Psystar's Web site. That move sent the store offline for several hours midday Wednesday, halting sales of Psystar's Open Computer, which comes preinstalled with Mac OS X Leopard in violation of Apple's licensing agreement for its operating system.

Psystar posted a statement on its Web site Thursday explaining the downtime. "Midday yesterday our store was not receiving any orders. This was due to the fact that our merchant gateway, Powerpay, dropped the ball on us and refused to process any more transactions from our company."

Louisa Deluca, vice president of loss prevention for Powerpay, said on Thursday that her company dropped Psystar because it violated the terms of its agreement with Powerpay. She declined to cite specific violations, but said "there are plenty of reasons why we shut the account off. We did not know that's what he was selling, we learned that yesterday."

Psystar has since switched merchant services providers to PayPal, who processed my transaction with the company on Wednesday. A PayPal representative did not immediately return a call seeking comment on that company's policies regarding sales of goods such as the Open Computer.

Psystar is still under siege from the press. A gentleman answering the phone Thursday morning directed all inquires to a press e-mail alias, and if I receive a response from the company, I'll let you know.

UPDATED 11:30am - I managed to obtain the cell phone number for Rudy Pedraza, who appears to be the owner of Psystar. A polite gentleman who answered the phone said that he was not Rudy, but confirmed the number belonged to Rudy. He took a message for Rudy, and promised to have him call back. Right. Holding breath.

The company also attempted to explain the elusive nature of its home address in Southern Florida in a statement posted on their site Thursday. Psystar's address has changed no less than three times in three days since the story exploded on Monday.

"We're in the process of moving to a new location which is now listed on our contact page," the company said in the statement. "The first new address posted (10481) was in error and our correct address is 10475 NW 28th Street. Psystar was, prior to this past week, not ready to handle the enormous production capacity demanded by the online community. Due to the incredible response we have now expanded to a larger commercial unit to handle the supplies and assembly of Open Computers."

Meanwhile, a News.com reader passed along an e-mail from a colleague who had alerted him to Psystar's existence on April 6, a week before the Psystar story blew up on Sunday night and Monday morning. That's the first instance I've heard of somebody who was aware of the Open Computer prior to Sunday evening, but if other people were aware of its existence earlier this month or year, please send me an e-mail or leave a comment below.