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The sales associates at retail outlets following proper security guidelines is a good start to protecting against fraud this holiday season. But what if you are an online business, or the magnetic strip on a card does not work? In Part 1 of this topic, we talked about proper procedure for accepting cards in a card present environment. Transactions that don’t involve swiping a card are considered “hand-keyed” transactions.

With hand-keyed transactions you run a greater risk of fraud because the magnetic strip information is not available. If you are in a retail environment you can do the following:

Continue reading "Tis the Season for Fraud – How Is Your Business Helping? (Part 2)"

According to the Bureau of Labor and Statistics of the U.S Department of Labor, the unemployment rate is currently 6.7 percent. With these staggering unemployment numbers, fraud is even more prevalent than ever. It is now even more important for business owners to maintain strict guidelines for retail purchases made with credit cards. Retail business owners in a card-present environment have just as much at risk as online retailers.

Visa requires that every sales associate check card security features, request an authorization, and obtain a signature.  Below are some steps to follow so you can minimize fraudulent purchases:

Continue reading "Tis the Season for Fraud – How is Your Business Helping? (Part 1)"

It is projected by many economists that the downturn in our nation’s financial status is only going to get worse in 2009. A few business owners and entrepreneurs have been turning the financial crisis into big profits and some say they are preying on instability. Mortgage company owners have opened mortgage restructuring companies, and debt consolidation business opportunities are booming.

Many merchant services providers have begun offering card processing for high risk business types. Some of such business types require additional information to get approved and can also be associated with higher rates. If you are looking to get card processing for a high risk business you are in luck and now have many choices. Some of the criteria to get a high risk account approved are as follows:

Continue reading "Profits from High Risk Businesses May Not Last Long"

Viruses come in all different forms, from the common cold to life threatening plagues. Computers are no different. Hackers try to break into banks at least once a day. RSA, a security division of EMC, is a premier provider of security solutions for Fortune 500 companies. Since February 2006, RSA has been tracking the Windows Sinowal Trojan. This virus has single handedly stolen the details of over 500,000 online bank accounts and credit and debit cards. This Trojan Virus installs itself on a user’s computer and steals all the information. RSA says “Sinowal Trojan is one of the most advanced pieces of crimeware ever created.”

More than 240,000 credit and debit cards have been compromised. This affects ecommerce businesses every day, as well as banking institutions all over the world. Most companies think they are safe because they have anti-virus software, but just having anti-virus software many not help stop this virus. The Sinowal virus uses a method known as “drive-by downloads.” Users can get infected without knowing if they visit a website that has been setup with the Sinowal code. Common websites include community sites such as Facebook or Myspace. Do you know what websites your employees are visiting? It only takes one person surfing the web. This virus has been around for over two years, and is maintained by a group of obviously very savvy hackers who would have had to create a very solid infrastructure to house the mass information collected. The software is hard to catch because new variations are constantly released.

Continue reading "The Sinowal Trojan Still Plagues Our Systems"

We all frequently read about various types of scams to look out for, warnings of Packet Sniffing, and stolen card numbers. The real scams to look for are the ones that are directly on your merchant account application. Fees seem to suddenly pop up after you have signed your agreement.

One of the most interesting scams that has come up frequently is related to hidden merchant fees. This scam entices merchants to apply for accounts at low rates with a brief quote. They conceal fees, rates, and many various extra charges. When applying for a merchant account, is important to stay away from advertisements that claim to have the lowest rates around. Some key fees to ask for are: discount rates, mid qualified rates (keyed rates), non qualified rates (rewards card and purchase card rates), transaction fees, setup fees, annual fees, statement fees, services fees, PCI Compliance fees, merchant club fees, and early termination fees.

Continue reading "What Hidden Merchant Account Fees Should You Watch Out For?"

FACTA (Fair and Accurate Credit Transactions Act of 2003) allows consumers to be able to obtain a free credit report once every twelve months from each credit reporting agency. More importantly, the act was created to help reduce identity theft. With the state of our current economy, credit card and identity theft is on the rise. This is affecting not only consumers but merchants alike.

On November 1^st 2008 FACTA has a deadline in place called the Identity Theft Red Flags Rule. Red Flags are indicators of a possible risk of identity theft. Red Flag rules listed in Section 114 of FACTA explains each rule and how to develop ID theft prevention programs. These rules apply to any business, bank, or issuer that offers credit or any type of finance option. Many financial institutions are not taking the deadline seriously since the first Office of Thrift Supervision audits will not occur until February of 2009. Merchants all together have become savvier and typically try to comply and report any red flags, but some may not know who to report these red flags to.

Although we all want our credit card information to be secure, it seems that merchants are not getting a fair shake when it comes to FACTA. Many class action lawsuits have been filed against a number of retailers. Recently, there was a class action law suit filed seeking willful damages based on printing of credit card expiration dates on receipts. The merchant was seeking $100 to $1000 for each violation. This applies to both paper and electronic receipts. Most mom and pop merchants would expect that their card processor would ensure that they are up to code. This is not always the case. Merchants should review the FACTA rules regardless of their size. The Supreme Court is currently reviewing willfulness and “reckless disregard” and expects to have a decision this quarter. 

With technology on the rise and our economy weakening more and more, scams are evolving within various industries. The merchant services industry is vulnerable to a variety of different scams.

About a month ago, a merchant contacted our company to set up a merchant account and began running thousands of dollars in transactions. After the first month of processing we received a call from a business owner claiming he received a credit card processing bill from us, but that he does not take credit cards. The imposter account was a SCAM! The fake purchases were made with stolen credit cards and deposited into bank accounts owned by the fake company. These guys generally run small transactions and fly under the radar. They also registered a domain name that is similar to that of the business they were impersonating.

How might this have been caught sooner? Merchants and consumers should check their credit reports frequently and report any suspicious activity. It is also helpful if companies look through the web to see if there are websites that resemble their own or use their business name.

Continue reading "Watch Out For Merchant Account Scams"

Credit card processing has been around for many years in some form or another. Back on the “Little House on the Prairie,” the Olsen general store allowed consumers to pay for items on an account. All the consumers were kept in a log book and paid when they could. We have evolved as a nation, and so has our technology.

In New York, in 1950, the first credit card was released by Franklin National Bank of Long Island. It was also in New York in 2001 that our entire outlook changed. The World Trade Center was attacked and Homeland Security was created to protect our nation from terrorism. The government put in place The Patriot Act, which affected the merchant services industry by putting stricter guidelines on account approvals. Merchants are now required to submit a copy of government issued documents identifying themselves and their business.

The following items are considered acceptable (you will need a minimum of one from each category):

Continue reading "Is It Getting Harder To Get A Merchant Account?"

Our economy is in a downturn and many financial institutions are tightening up guidelines and raising fees. These days even acquiring banks are cracking down on various business types. No company wants to take on a possible financial loss. There are merchant services providers out there that specialize in high risk business, but you have to be prepared to provide all the information that is requested.

Merchants may be required to provide the following:

• Two years of tax returns for the guarantor
• Six months of processing statements. If you have not processed before, you will be required to provide six months of bank statements
• If you are an internet based account, you will need to make sure you have a clearly visible return policy
• It helps to have a tangible product – I once had a loan restructuring company create a package with a welcome letter and question kit to send to all his customers once they purchased his services.

Continue reading "Is Your Merchant Account Considered High Risk?"

Back in 2005, many of us in the merchant services industry were in the thick of the CardSystems security breach. The Federal Trade commission claims "this is the largest known compromise to financial data to date". Millions of dollars in fraudulent purchases were made with the stolen data. Processors, like the one I was working for at the time, had only a short window to move all their merchants to a new platform. This incident made it clear that card holder data must be protected and more precautions should be taken to ensure that card holder data is not compromised on this large of a scale again.

Now merchants are in for a new type of threat. The very software that business owners use on their computer networks may cause card holder data to be compromised. Packet sniffers are software or hardware that monitors data on a network, and they have been around for a long time. This software is typically used to troubleshoot a network issue or to test firewalls . Conversely, we have malware that is designed to damage a network. It appears that attempted fraud is on the rise again. Packet sniffers are being used as malware on systems to snag or intercept card holder data.

Continue reading "Is Your Online Payment Gateway Secure?"