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Fraud Prevention For Credit Card Processors
Our company was initially established by merchant risk
professionals to give an additional underwriting tool for the merchant
evaluation process, helping to prevent
application fraud and thus merchant fraud against acquirers.
In addition to searching for negative things like criminal
records, bankruptcies, liens, and civil judgments, Fastback also provides confirming
information on the principal's home ownership and history; business name, addresses, telephones as well as other businesses the merchant may connect with;
incorporation data; and UCC filings.
Inconsistencies in the data compared to what the merchant has put on the application signal the underwriter to look further.
The instant data Fastback Reports provides is excellent for use in evaluating the typical low risk merchant application. For pre-underwriting the potentially higher risk merchant we suggest Acquirer Risk Management Solutions
How Merchant Fraud Can Happen
Credit card processors lose hundreds of millions of dollar every year to merchants who are themselves fraudsters.
Typically these are merchants who are selling some product or service that will not provide the customer with what he expected, or perhaps with nothing at all. This results in the customer initiating a chargeback with his card company. If the merchant has disappeared, or has no money to pay for the chargeback, the bank or processor is responsible.
Other scammers will set up false merchant fronts to launder unauthorized credit card charges. They can buy card numbers and the associated data that allows them to process the transaction and will be very hard to find by the time the cardholder disputes the charge.
Alternatively, they will have relatives or other fellow countrymen obtain credit cards which will then be run through the payment system for large amounts, even though no merchandise changed hands. The complicit cardholder will then dispute the sale with a chargeback or will default on his credit card company.
Other Merchant Fraud that currently is publicly reported
Fraudsters key quickly into the vulnerability of the public. Disasters, famine, and economic decline bring them out of the woodwork like termites.
For the last ten years the popular scam was "credit repair," which preyed on those who needed to improve their credit score. This has been largely replaced by "loan modification" which targets people near foreclosure with the false hope that the mortgage company will reduce the monthly payments.
Not only does the homeowner lose the upfront payment and receive no benefit, the processor of the card transaction may lose the money taken by the merchant. Scams set up to defraud unwitting consumers also may result in huge chargeback events for credit card processors.
2:11-cv-02479-JLL -CCC FEDERAL TRADE COMMISSION v. MILLENNIUM TELECARD, INC., FADI SALIM, et al
Jose L. Linares, presiding
Claire C. Cecchi, referral
Date filed: 05/02/2011
Date of last filing: 05/13/2011
"While Defendants correctly state that enrichment is the habit of capitalists, Opp. at 7, they completely miss the point. What is significant is the totality of the circumstances and what emerges is Fadi Salim, a fraudster who: (1) bilked consumers out of millions of dollars, one prepaid calling card at a time; (2) has no regard for the corporate form; (3) displays an appetite for a lavish lifestyle; and (4) has the ability, means and connections to place his assets offshore and outside the FTC s reach. Without a receiver and an asset freeze, there is no check on Mr. Salim s ability to completely drain Millennium and any personal funds that would otherwise be available for consumer redress."
See Blog for more cases
Contact us for more info about Fastback Reports
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