Merchant Service Reports and News

Online sales tax could be coming to your state

2012-02-11T14:38:00.005-05:00

Small online retailers could be facing a daunting task with the push to tax online transactions. Over 12 states have enacted laws that impose a sales tax on online transactions, and 10 more are considering the imposition.

Small businesses will have to “collect sales taxes in dozens of states and jurisdictions that subscribe to differing rates and definitions of taxable products,” according to Jerry Cerasale of the Direct Marketing Association.

There has been a push by brick-and-mortar retailers to tax online purchases in order to level the playing field. They say that the exemption of online purchases from sales taxes is unfair.

Amazon's Ty Rogers told USAToday that his company endorses the legislation, as “the only way to level the playing field for all sellers and provide states the right to obtain more than a fraction of the revenue already owed."

It is important than ever for small businesses to find a merchant service provider who save costs, and offer technologies that are keeping up with these changes.

Using PINS is safer; Europeans get it why don't Americans?

2011-12-07T18:13:00.003-05:00

Why are U.S. merchants and consumers hesitant to use PINs to authenticate purchases as their counterparts in Europe have done?

Despite the fact that magnetic stripe cards are vulnerable to fraud, and often times more expensive to use, only 25 percent of American consumers choose a PIN transaction. Because of this trend, card companies promoted the use of contactless versions of the EMV chip, which has helped reduce the severity of identity theft attacks in Europe.

Meanwhile, American banks are still offering little consumer protection from identity theft, compared to their European counterparts.

Merchants strike back, sue Fed

2011-11-29T21:31:00.002-05:00

The National Retail Federation is suing the Fed due to the excessively high cap on debit card interchange fees. The retail coalition asserts that the fees in are violation of the law.

The group claims that the "regulator caved to pressure from bank lobbyists in setting the limit at an average of about 24 cents per transaction, rather than the initial proposal of 12 cents. The coalition says that in elevating the cap, the Fed mulled costs that the law did not permit, and that the board rejected its earlier perception that the only costs that should be considered in the fee were those entailing authorization, clearing, and transaction settlement. The suit argues that the debit interchange cap is an "unreasonable interpretation" that exceeds the authority accorded to the Fed under the law," according to an AP article.

Banks don't take action to prevent fraud, pass cost to consumers

2011-09-28T15:35:00.003-04:00

It is well known that banks do little to prevent credit card fraud. Unlike their European counterparts, American banks are not as stringent in their card acceptance requirements. Thanks to the excessive charge back fees, it is not in their interest to completely eliminate fraud and abuse.

In a recent article in Bank Info Security, the American Bankers Association's Steve Kenneally noted "that the industry agrees that a 1 cent transaction fee is not enough incentive for financial institutions to invest in fraud-prevention solutions."

The financial industry associations are hoping to mitigate the impact of the Durbin Amendment by concentrating on the measure's fraud prevention portion. They claim that the cost of fraud prevention is much higher than originally considered.

Data breach notification subject of California law

2011-09-20T11:29:00.002-04:00

Data breach notifications are the subject of a new California law. The law outlines the details which will be required in data breach notifications.

Required details include

General description of the event

Type of information compromised

Time of the breach

Data breach notifications must provide consumers with the toll-free phone numbers and addresses of the major credit reporting agencies in California, in some cases.

The data breach notifcation law goes into effect next January.

Skimming: Best tips for small convenience stores and gas stations

2011-08-31T12:02:00.005-04:00

The NACS has issued a very useful report on the best practices for small convenience stores and gas stations.

Skimming Concerns? Here’s What You Need to Know.

A number of news reports over the past month have focused on the topic of credit card skimming. NACS payments consultant Gray Taylor separates fact from fiction, and provide tips for what retailers and consumers can do to minimize the likelihood they are a target.

What is skimming?

Skimming is any attempt to acquire the data from a credit or debit card transaction. At its simplest, it is stealing credit card receipts. Today, it often involves placing a small electronic device over a terminal that the criminal later takes back to download card data. In all cases, the thieves need to open your dispenser to place the skimming device(s).

Is skimming a particular problem at convenience stores/gas stations?

The incidence of skimming at the fuel island is over-exaggerated, as industry data points to retail environments where the consumer gives up possession of the card as the biggest source of skimming. In fact, according to the 2009 Verizon Business Data Breach Investigations Report, the real risk to consumers isn’t retail at all; 93 percent of compromised accounts occurred at breaches within financial institutions. The simple fact is that criminals go “where the money is,” and complicated, site-based hacks of retailers is a high-risk, low-yield proposition.

Consumer Reports magazine and other publications have suggested that customers use signature debit, instead of PIN, to minimize the risk. Is this good advice?
The recommendation that consumers not use their PINs when paying is erroneous at best, and could increase consumer risk of compromise, overdrafts and increases retail prices.

Industry data shows that card transactions without PINs have a six times greater chance of being compromised – which is why PIN usage is the de facto standard for world payments. Consumers who choose not to use a PIN are also at risk for overdraft fees that occur when their bank does not remove debit holds from their account in a timely fashion. Signature-based transactions are processed on the antiquated Visa and MasterCard systems that do not process in real-time, versus the instant operation of PIN debit. Not using PIN also increases the cost of the transactions, which is passed back to the consumer. The Federal Reserve Bank of Kansas City documented that a $50 transaction processed with a PIN cost the retailer 49 cents, while the same transaction processed without a PIN cost the retailer 68 cents – a cost difference of 19 cents.

The assertion that “a lot of gas pumps use older technologies, so PIN codes are not encrypted” is totally unsupported by the facts. With the introduction of master session encryption technology in the early 1990s, fuel dispensers have been required by Visa and electronic funds transfer networks to encrypt PINS or not accept PIN debit. In fact, every one of the estimated 6 million fuel dispenser terminals installed today accepting PIN debit encrypts PIN numbers – as has been the case for the past 15 years. The convenience and petroleum retail segment has invested more than $5 billion in payment systems and technology to provide a safe, fast and accurate card payment experience for consumers.

How can a retailer check if terminals are being skimmed?

Unless you are a trained dispenser technician, you probably can’t tell. We recommend serial-numbered security strips and periodic inspections of them. The idea is to know if the dispenser has been accessed – if a strip is broken, then shut down the dispenser and call in a tech to inspect the pump.

How can retailers minimize the risk of being skimmed?

Here are three simple steps:

Use serialized security strips over all access doors you wish to protect.

Re-key the locks on dispenser doors that have access to electronic payment data.

Consider investing in anti-breach kits for dispensers. Manufacturers now offer anti-breach kits, which generally notify and shut down dispensers that are accessed without proper security code entry. This can be expensive, but is the ultimate line of defense.

What should a retailer do if there is an incident?

Stop the bleeding. Take the dispenser offline to discontinue any more transactions.

Have a tech identify the device, but do not remove or touch it. If there is no device, get it in writing from the tech and restart the dispenser.

Call the police to inspect. Remember, this is a crime scene and the perpetrators are probably doing the same thing to other retailers in the general area. Also, the Secret Service and FBI are frequently involved in large cases; let the police handle this. After the investigation, ask for a dated police report.

You don’t know if any of the cards used at the dispenser have been compromised, so don’t assume that they have been.

Do you have advice for consumers?

Use payment terminals and ATMs at established retail or banking locations, where access to the device is controlled by on-site personnel.

Use a PIN whenever you can; it reduces your risk of compromise six-fold and leads to lower retail prices.

Place reasonable limits on the daily or weekly withdrawals from ATMs.

Even the latest chip and PIN technology currently being installed outside of the United States has proven to be vulnerable to attack. The latest reports of skimming and the recent news of hundreds of company systems being hacked is irrefutable evidence that the United States needs to have a national conversation about payment, identity and access security, and how this country can lead the world to the next generation of data security, instead of following it.

Settlement reached between the U.S. Justice Department and MasterCard and Visa

2011-07-26T23:48:00.005-04:00

A settlement between the U.S. Justice Department and MasterCard and Visa has been reached on the issue of merchant choice. District Court Judge Nicholas Garaufis approved the settlement which permits merchants to offer discounts or rebates. The card processing networks must now allow merchants the choice in card acceptance. This is a substantial victory for small busness owners. States attorneys general and the Justice Department filed the lawsuit.

The big three card companies made it nearly impossible for small merchants to encourage or steer customers to use cards with lower fees. MasterCard and Visa have introduced more and more reward type cards with much higher interchange rates. These cards have been very lucrative for Visa and MasterCard, but small merchants have borne the burden.

Related articles:

Credit Card Surcharges and Restrictions: Who Really Benefits?

Credit and Debit Card Minimum Purchase Requirements Allowed

Loretta Hunnicutt

Fed defines "pre-paid cards"

2011-07-12T19:39:00.005-04:00

The Fed has defined what qualifies as a "pre-paid" card. This definition distinguishes the cards that will and won't be affected by interchange exemptions.

According to the Fed, "pre-paid" cards are those whose monies can only be accessed through the card. "Transaction cards" are those cards that allow monies to be access without the card, but through, ACH, checks, P-2-P among other methods.

Prepaid cards are not exempted from the interchange restrictions outlined in the final Dodd-Frank regulations.

Loretta Hunnicutt

Consumers and small merchants ignored in debit cap fee increase

2011-06-30T18:02:00.003-04:00

In what some believe is a betrayal of small merchant and consumers, the U.S. Federal Reserve has finally announced the long awaited raise of the debit card interchange rate cap from 12 cents to 21 cents. The Dodd-Frank financial regulation law mandates the debit fee cap.

Dodd-Frank was supposed to take affect July 21, but the deadline has been extended to October 1. The law was intended to protect merchants and consumers from excessive banking fees, but at the last minute the banks’ pressure on the Fed won the day.

According to a story in the Washington Post, “The American Bankers Association recently sent a letter to Bernanke requesting consideration of the cost of maintaining the network to process debit card transactions, customer service expenses, and fraud losses, among other things.”

The costs of processing had been taken into account early in the process, but the average consumer and small merchant do not have the lobbying power of the big banks.

Loretta Hunnicutt

Settlement sought in antitrust lawsuit against Visa and Mastercard

2011-06-17T12:11:00.002-04:00

A federal court in New York received a request from the U.S. Justice Department to approve the settlement between the department, MasterCard and Visa. The antitrust lawsuit rightly claimed that credit card companies forced users to use certain cards with higher fees.

According to an article in the Wall Street Journal, “Under the settlement, Visa and MasterCard agreed to allow merchants to offer incentives to customers to use cards with lower merchant fees. The department also has revealed it is working with Visa and MasterCard to offer "an electronic means to differentiate among card types" because some cards carry higher interchange fees for retailers. In October, the Justice Department filed an antitrust lawsuit against American Express after the firm declined to join the industry-wide agreement.

American Express has had a case filed against them by the Justice Department as a result of their refusal to join the agreement with MasterCard, Visa, and the Justice Department.

Loretta Hunnicutt

Financial literacy for kids

2011-05-28T14:45:00.005-04:00

The following is an interesting article from Rob Carrick for the Globe and Mail

A note to all the people out there with perpetual credit card debt, mega mortgage payments and a gimme-gimme attitude about spending: Your kids are watching you.

The same applies to parents with good financial habits. Even by shopping for bargains at the grocery store, you may be teaching useful lessons about managing money.

For the rest of the article click here.

Loretta Hunnicutt

MasterCard raises rates and fees

2011-05-01T00:38:00.003-04:00

MasterCard Worldwide has hiked rates for the popular World Merit III rewards card. This type of MasterCard can comprise 20 percent to 30 percent of a retail merchant's MasterCard transactions. MasterCard Worldwide just presented its revisions to interchange rates and assessments for spring 2011.

The assessment fee will increase from 0.11 percent to 0.12 percent on consumer and commercial credit volume for transactions of at least $1,000. This increase could lead retailers to demand caps on interchange rates. The retailers have made the push to cap debit fees with the Durbin Amendment to Dodd-Frank.

Loretta Hunnicutt

Delay of debit fee caps sought by Senator Tester

2011-04-06T11:15:00.004-04:00

Sen. Jon Tester (D-Mont.) submitted an amendment to a small business investment bill and entered the struggle over card fees for merchants. Tester’s amendment requires a two-year delay in implementing new government rules for capping debit fees at 12 cents per transaction. Small merchants are fighting for the cap which is opposed by card networks and banks. The author of the fee cap, Sen. Richard Durbin (D-Ill opposes any attempts to delay the bill’s implementation.

Ben Bernanke , Federal Reserve chairman reported that the Federal Reserve’s issuance of new debit fee rules would not meet the April 21 deadline, but a final rule should be in place by July 21. The agency says the proposal has elicited more than 11,000 comments that require careful examination and consideration.

Small busines owners should consdier contacting the Federal Reserve and express support for the caps. http://www.federalreserve.gov/feedback.cfm

Loretta Hunnicutt

Chargebacks harm small businesses

2011-02-23T12:04:00.003-05:00

Chargeback rates are one of the risk indicators utilized to determine your processing rates by all credit card processors. A merchant’s chargeback ratios equal their risk; high risk equal high rates. Small businesses are damaged by high processing rates from due to the high risk associated with fraudulent charges. Avoid pay-out delays, high fees, and the demand by processors by reducing your risk.

Merchants can decrease their risk by implementing certain practices.
Fraud is the number one cause of chargebacks. It is imperative for merchants to take measures against fraud. For more information visit our chargeback page here.

Loretta Hunnicutt

Debit interchange fee caps fought by banking industry

2011-01-28T19:14:00.005-05:00

Debit interchange fees mandated by the Dodd-Frank are being challenged by the banking industry. Bankers are fighting interchange restrictions and are trying to delay, weaken, or repeal limitations on debit interchange fees. They are challenging caps on debit card fees and trying to prevent the imposition of those fees by lobbying the Federal Reserve and Congress.

Banking industry lobbyists believe that the new Congress will cave to pressures to reconsider the fees, and are also pressuring the Federal Reserve Board to ease its proposal to cap fees at 12 cents. American Bankers Association representative, Ken Clayton states “the Fed really needs to go back to the drawing board and put together a more workable solution based on the authority it's granted."

An American Bankers Association representative claims that the Federal Reserve’s proposal prevents banks from including those costs associated with fraud costs in developing interchange rates. Banking industry hope that politics will win the day, and the Federal Reserve will more flexible on this issue that it appears to be at this time.

Note: Both Republican and Democratic lawmakers claim that the interchange rate mandate forces the government to artificially set price controls, leading to objections to the Durbin Amendment. Bankers have filed a lawsuit challenging the constitutionality of the Durbin amendment

Loretta Hunnicutt

CARD Act Cannot Curb Predatory Credit Card Practices

2011-01-13T11:42:00.006-05:00

Predatory lending practices continue despite the CARD Act. Credit card companies haven’t stopped their predatory lending practices and are still targeting students even though the CARD Act prohibits offers to anyone under 21.

University of Houston Law Center conducted a recent survey of 300 undergraduates. The study finds “that most of them have received credit card offers.” The Wall Street Journal quoted Houston University Professor Jim Hawkins, “there are some things that haven't changed."

Designed to stop the predatory lending practices that targeted students with solicitations for credit cards and then left them trapped under heavy credit-card debt, the CARD Act took effect in February, 2009. The new rules for banks and card issuers banned them from offering credit cards to anyone under the age of 21. Those under 21 must have a qualified co-signer or must prove that they have sufficient income to repay the debt.

Of those surveyed under the age of 21, 47 percent of freshman reported seeing credit card companies offering tangible gifts on and around campus which is a violation of the CARD Act. 76 percent said they had received credit card offers since the beginning of 2010. According to the survey at least 72 percent of freshmen said they saw credit card issuers marketing to students off campus. 29 percent claimed that in order to get the cards they used their student loans as part of the income they reported to meet the new income requirements.

The many loopholes in CARD Act allow credit card companies to continue to target young consumers. Consumers of all ages must read the small print and avoid those banks and other lending institutions that prey upon the inexperienced. If all consumers take a stand against those who employ predatory practices that would do more to end these practices than any government regulation.

Contributed by Loretta Hunnicutt

Prepaid Card Regulation Called For By Senator Menendez

2010-12-08T15:48:00.016-05:00

Legislation that would regulate and remove certain prepaid debit card fees, as well as mandate enhanced and full disclosure of fees before the purchase of a prepaid cards is being introduced by U.S. Sen. Robert Menendez (D-N.J.). The Senator says, "for too many consumers using prepaid debit cards, Black Friday may have put them in the red because of surprise and unreasonable fees." Consumer Financial Protection Bureau interim director Elizabeth Warren received a letter from Menendez stating that he wished to work with her and the bureau to "properly regulate this industry and if necessary to develop legislation to protect consumers without stifling competition." PhilanthroPay© executive and MSRN contributor, Loretta Hunnicutt praises this step by Menendez and hopes that more light will be shed on some of the more questionable offerings in the prepaid card market and the predatory banking practices.

Related stories:

Banks Pin Revenue Hopes on Prepaid Cards

Keeping Up With Everybody Bashing The Kardashian Dedit Kard

The Banks' Great Plastic Hope: Prepaid Debit Cards

Loretta Gutman Hunnicutt, Lori Gutman Hunnicutt. Loretta Hunnicutt, Paytran, Philanthropay

Seeking Information About Gevorg Gorj Kegeyan

2010-12-08T13:09:00.001-05:00

2/7/11

Seeking information on Gevorg Gorj Kegeyan, a 53-year-old man. He was arrested last week on credit card fraud charges after search warrants were served at his home and three businesses Wednesday.

Warrants were served at The Cigarette Box, 5891 W. Craig Road; Colton's General Store, 675 U.S. Highway 95 in Searchlight; and The Cigarette Box, 2311 S. Casino Drive in Laughlin.

Credit cards, gift cards, ATM cards and skimming machines were discovered in police searches.

Credit and Debit Card Minimum Purchase Requirements Allowed

2010-11-19T20:28:00.008-05:00

Should small merchants institute credit and debit card minimum purchase requirements?

Many small businesses will start instituting minimum purchase requirements for credit and debit card purchases now that they are permitted by the Dodd-Frank financial reform law. The Dodd-Frank financial reform law allows merchants to require up to a $10 minimum for credit card purchases. A handful of consumer advocates are unhappy with the minimum purchase requirements and MasterCard is also opposed to limits on credit card purchases. However many small merchants find that they must either pass the costs of interchange onto all their customers or only to those who use cards.

Most merchants understand that accepting cards improves their sales. While customers demand the convenience of credit and debit card acceptance, card use is down and costs are up for merchants. Small merchants must conduct a cost benefit analysis to determine how required minimum purchase requirements will affect their customers’ satisfaction and sales.

Loretta Hunnicutt

Small Retail Businesses: Trends To Consider

2010-11-16T08:41:00.007-05:00

New business opportunities exist to launch local community based retailers and wholesalers that advocate certain values and produce their own goods. Furthermore, local community stores are experiencing a revival. Retail locations near cultural and spiritual venues will be attractive.

The investments of retail companies are focused on introducing sustainable solutions, products and energy saving measures, as well as virtual local community building and e-commerce solutions.Debit cards and cash are tending to be the payment solutions of choice.

The following are the top consumer demands and trends:

Products and companies that signal local, organic, and ethically sound production are preferred.

Consumers’ priorities are their social lives and the experience of community (even cooperatives at the community level are experiencing a revival).

Consumers expect that retailers will make the shopping experience as easy as possible.

Companies use local promotional web spaces, and branding is linked to value “movements.”

Retail companies are seeking to increase the proportion of goods they source from local high quality suppliers.

Companies should consider focusing on providing convenience and e-commerce options to make shopping easy and effortless for consumers.

Loretta Hunnicutt

Consumer Spending Up Due To Luxury Item Sales

2010-11-07T13:03:00.000-05:00

Consumers are increasing their spending in 2010 for the first time in three years. Higher levels of spending were tracked by the government in roughly two-thirds of the 350 categories; most notable is luxury spending. According to the Bureau of Economic Analysis, spending on luxury items such as TVs, jewelry, recreational vehicles, and high-end pet supplies helped consumer spending post a year-over-year increase of 1.4 percent during the first eight months of 2010.

Luxury sales have been fueling much of the spending. TV sales haved increased nearly 35 percent this year. There has been a strong demand for three-dimensional TVs, bigger panels, and high definition. Winnebago has also reportec that have doubled. Sales of pet supplies also have increased and included sales of high-end items such as timed car food dispensers, organic dog food.

Small businesses should watch these trends and consider if and how their inventories might change to better meet these demands.

Western Commercial Bank Fails

2010-11-05T20:27:00.013-04:00

Western Commercial Bank was closed today Friday, November 5, 2010.

Western Commercial Bank was merged into First California Bank in Westlake Village after being closed by the state Department of Financial Institutions.

Western Commercial's $98 million in loans and other assets as well as its $101 million in deposits will be taken over by First California, with the FDIC sharing losses on about $84 million of loans. The FDIC said the failure was expected to cost the nation's deposit insurance fund $25.2 million.

First Vietnamese American Bank in Los Angeles was also closed earlier today due to its poor performance. The bank will be taken over by Los Angeles-based Grandpoint Bank and will reopen Saturday as a branch of the Grandpoint Bank, the FDIC said

The bank is the 143rd institution issured by the Federal Deposit Insurance Corp. (FDIC) to fail in the nation this year, and the 12th in California. The bank's failure will cost the FDIC's Deposit Insurance Fund 9.6 million dollars.

Western Commercial Bank closed November 5, 2010
First Vietnamese American Bank closed November 5, 2010
Innovative Bank closed April 16, 2010
Butte Community Bank closed August 20, 2010
Pacific State Bank closed August 20, 2010
First Regional Bank closed February 1, 2010
For more information on bank closings visit FDIC

Seeking information on Mr. Franks and his associates. Seeking information on FVAB and any related blogs created on or about July 2010, including blogspot sites.

Loretta Hunnicutt

Card-Not-Present Fraud Risks and Mobile Payments

2010-10-16T22:54:00.004-04:00

Mobile Payments Increase Fraud Risks

The highest card-not-present fraud volume in 2009 was from merchants accepting mobile phone payments. According to a Javelin Strategy and Research survey, on average, retailers faced about 3,400 attempts to perpetrate fraudulent transactions per month. Due to the large number of attempts, 38 percent of counterfeit transactions go through undetected.

As a percentage of total revenue, fraud losses were 1.13 percent for mobile merchants, 0.86 percent for merchants with both online and brick-and-mortar outlets, and 0.83 percent for online-only merchants. In the Javelin poll, 25 percent of retailers of questioned said they still plan to start accepting mobile payments within the next year. The majority of consumer card fraud occurs on existing debit and credit card accounts, according to the Javelin survey, with credit and debit card fraud respectively accounting for 65 percent and 28 percent of all existing card fraud last year.

Merchants should fight fraud by increasing the use of point-of-sale authentication devices, rules-based filters, internet protocol address detection, tracking tools and online-purchase authentication systems. They should not rush into the acceptance of mobile phone payments without first reducing their likelihood of victimization. Merchants should thoroughly check the history, reliability, and security of their merchant service providers.

Loretta Hunnicutt

Good News For Small Merchants

2010-10-10T12:35:00.002-04:00

PCI News For Small Business Owners

Good News for small merchants; the PCI Council will offer a web site for small merchants. In order to provide assistance to small merchants in understanding the impact of data security measures, this fall the PCI Security Standards Council will launch a Web site. The PCI Data Security Standard principles and reasoning will be available. The PCI Data Security Standard council’s Troy Leach said that small merchants will be able to understand why the measures are important to them, and “why it's important to protect their customer information." According to an article in ISO & Agent Weekly “The council also plans to align the Data Security Standard, Payment Application Data Security Standard, and PIN Transaction Security Standard into three-year cycles. The move would give merchants more time to work with the current versions while reviewing upcoming versions, says the council's Jeremy King.”

Mobile Commerce Fraud

2010-09-25T11:12:00.005-04:00

About 12 percent of all e-commerce transactions are on track to be facilitated by mobile devices by 2012, however mobile commerce fraud detection is lacking. According to Gartner. "Enterprise applications must detect fraud in these mobile environments, but fraud detection tools available today that work in [wired] computing environments don't work well or at all in the mobile world." William Clark a Gartner analyst notes that mobile fraud detection tools will not be mature until at least 2012. It is imperative for enterprises to create and implement mobile fraud detection systems.

Consumer tip: Beware of testiphonials

Loretta Hunnicutt

Automated Clearing House Fraud Is On The Rise

2010-09-21T16:07:00.004-04:00

In a revealing article posted below in part, Automated Clearing House (ACH) fraud is examined. From the examiner.com article we learn what ACH fraud is, and how ACH fraud occurs. ACH fraud is on the rise.

Anatomy of an ACH fraud
September 14th, 2010
examiner.com

Electronic banking can be dangerous. Protect yourself against ACH fraud.

In light of recent news, and the publishing of Mr. Well’s Internet Fraud Case Book, (Check out Chapter 5), it would behoove us all to go back to the basics to examine the anatomy of an ACH fraud so that Jacksonville consumers and business can learn about this growing threat and begin to protect against theft.

What is an ACH?

ACH stands for Automated Clearing House transactions. These transactions are quickly replacing checks due to the rise of the internet and the need to move money more quickly. You probably have signed up for direct deposit for your paycheck and this is an ACH transaction. You may not know it but if you write a check in your local Jacksonville Wal-Mart, the paper check is not actually sent to your bank but is routed through the ACH networks.

What is ACH Fraud?

An ACH fraud occurs typically via unauthorized access to another person or business entity’s bank account. Additionally but not as common, ACH fraud can occur on a brand new account opened for sole purpose of funneling funds. These cases often involve identity theft as well as money laundering.

During an ACH fraud, the fraudster will typically gain access to an account and ACH the funds off to another bank account. The legitimate owner may not be aware of the transaction for a few days to weeks and by the time it is discovered it is often too late to recover the funds.

Loretta Hunnicutt

Ecommerce Merchant Protections Against Fraud

2010-09-11T13:27:00.004-04:00

How Ecommerce Merchants Can Avoid Chargebacks

Ecommerce merchants using payment gateways for credit and stored value card transactions must ensure that their gateway provider offers screening features. These features include address verification (AVS), CVV2, and an IP locator. Top payment gateways will offer all of these services and they should be automatically activated and only turned off at your request.

Payment gateway providers should use the Address Verification System (AVS). AVS protects ecommerce merchants by comparing some of the billing details on the order to those held by the cardholder’s bank. However the transaction may receive approval even in cases where the address verification information does not match. This makes the ecommerce merchant vulnerable to chargebacks. To avoid this scenario check the settings on you interface so that transactions are “flagged” as potentially fraudulent.

Top payment gateway providers will offer CVV2 checks. The CVV2 number are the three digits on the backs of a credit and debit cards, In the case of AMEX cards it is the four stand-alone digits on the front of the card. This should ensure that the person using the card is in possession of the card itself. This is not foolproof as some thieves can get hold of this information.

Address Verification and CVV2 will not protect an ecommerce merchant from all fraud and fraudsters, but it will minimize your risk and responsibility. Chargebacks increase the cost of business for everyone. Chargebacks have in some instances, put fine small ecommerce merchants out of business. Customers value their privacy, but they also value the lower cost of services due to the use of security measures.

Loretta Hunnicutt

PCI Compliance For Small Merchants

2010-09-09T17:38:00.006-04:00

Everyone who accepts credit and debit cards will be affected by the new requirement by card brands for acquiring banks and the largest independent sales organizations to file plans with the card brands outlining how they intend to bring the 5 million small merchants, restaurateurs, and other mom-and-pop businesses into line with PCI data security standards. The plans of the acquiring banks and the largest ISOs will encompass the smaller ISOs, and all of the plans' provisions trickle down to card-accepting merchants.

While it is reported that 96 percent of the largest Level 1 merchants have achieved PCI compliance, Visa's Jennifer Fischer says the successful compliance rate for small merchants is "moderate." The card brands have not done an adequate job to inform ISOs and by extension, small merchants on what are the best practices and expectations. Small business owners should become aware of the standards that apply to them whether they use simple standalone terminals that receive confirmation over phone lines, or employ integrated payment applications that run on the Internet.

To learn more go to ISO & Agent Weekly (09/01/10) McKinley, Ed

Loretta Hunnicutt

MSRN: Reader Survey Results Are In

2010-09-03T14:23:00.010-04:00

Are our readers interested in credit card fraud? Where do they come from and do they want to learn about identity theft? What is important to the credit card accepting small business owner?

The results of the recent Merchant Service Reports survey were surprising to say the least. The results of country of viewership origins were not unusual, however a few of the top countries and their interest may lead to an introduction of a wider choice of languages and stories available for our readers. The top stories were not as expected, and further investigation into why the top stories are popular is necessary before we decide if changes will be made to our format. Search engine data and search terms give us some indication what viewers are looking for specifically, but no indication as to the reasons for those searches.

One thing is clear, MSRN has a readership that is interested in good credit and debit card acceptance practices, avoiding chargebacks, and how to protect themselves from fraud.

The top countries of readership are:

United States
Canada
Panama
Japan
Australia
United Kingdom
Romania
Serbia
Germany
India

Top search terms are:

(818) 442-6000
"magne print"
how to avoid toll call chargebacks
merchant service reports

The most read pages are:

Readers' Interests/Investigations/Topics of Concer...
Best Card Practices
What Is In A Merchant Statement?
Credit Card Processing Costs
FBI: Avoid Fraud

Loretta Hunnicutt

Small Businesses New Targets of Skimming

2010-09-03T12:05:00.004-04:00

Credit and debit card skimmers have found news targets in the unsuspecting small business owners. Are you aware and are you prepared?

Smaller retail businesses and financial institutions are the focus of the increase in fraud schemes, according to Identity Theft Research Center's Linda Foley. Approximately 40 reported skimming or point-of-sale attacks have occurred in 23 U.S. states so far this year. Industry expert Branden Williams says that increase in skimming and POS fraud incidents is an indication that companies are making progress in fortifying their exterior defenses, while the trend toward smaller and smaller devices is an another indicator.

Mike Urban of FICO says the size of skimmers' targets has shrunk as larger organizations have been securing their environments. According to BankInfoSecurity.com, “The rollout of the EuroPay, MasterCard, Visa, and chip and PIN technologies is fueling the growth of skimming at both ATM and retail POS outlets in the United States, where payment cards still rely on magnetic stripes, which are easier to skim.”

Criminals are taking advantage of the small business owner who does not expect and is not prepared for skimming and point-of-sale attacks. PCI DSS has reduced fraud in some markets, but the system is only secure as each player in the system.

For more information go to BankInfoSecurity.com

Loretta Hunnicutt

Let Your Voice Be Heard: FDIC Wants Public Input

2010-08-27T13:32:00.006-04:00

Public input is sought by the U.S. Federal Deposit Insurance Corp. in its efforts to complete regulations to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Federal Reserve is authorized through the law to develop regulations that addresses debit card interchange. According to industry insiders many other provisions could affect the merchant service acquiring section.

Andrew Gray of the FDIC indicates that the agency will fast-tack the process and that variable timelines are affiliated with the required rulemaking. "We've already announced a reorganization as part of the legislation and will be moving forward through the formal rulemaking process, allowing for notice and comment, etc.," says Gray. The FDIC will establish the new Office of Complex Management and Division of Depositor and Consumer Protection which is designed to assist in fulfilling the agency's duties as directed by the financial reform legislation.

Loretta Hunnicutt

Credit Card Surcharges and Restrictions: Who Really Benefits?

2010-08-18T13:07:00.003-04:00

The California State Senate passed a bill which will prevent retailers from applying fees to debit and prepaid card transactions, while it is still awaiting action from the State Assembly. Groups such as the Consumers Union, Visa, AARP, and chambers of commerce are all sponsors of the bill. Sen. Jenny Oropeza author of the bill says that debit cards are already used to pay Social Security, veterans' benefits, and child support payments, and they will soon be used to pay disability payments and unemployment insurance.

Visa's Paul Russinoff says the bill expands "existing consumer protections for credit card use to debit cards." He says that surcharges undermine the electronic payments process and are unfair to low-income consumers. Advocates of the bill claim it closes a loophole in state law that allows merchants to apply surcharges on debit and prepaid card transactions. Many critics question whether it really protects the credit card companies at the expense of the small retailers and the cash carrying public.

Loretta Hunnicutt

Federal Reserve Report: Small Business Owners and Credit Card Use

2010-08-11T21:31:00.005-04:00

According to the Federal Reserve, 83 percent of U.S. small businesses used business and personal credit cards in 2009. Small business owners have a long history of turning to credit cards to start their companies and keep them running. American Express alone processes $1.6 billion worth of transactions from business owners every week.

Credit cards are a convenient way to pay for everything from raw materials to travel for sales calls when properly used. Cash flow management and reliable recordkeeping of spending on a monthly and annual basis are two benefits of smart card use.

Due to the enactment of the CARD Act, Federal Reserve issued a report on how similar regulations would impact small business credit cards. That report, issued in May 2010shared a wealth of information on small business credit card usage, such as:

• Credit cards usually have higher credit limits than consumer cards.

• Credit cards are more expensive for credit card companies to issue and service than consumer cards.

• Credit card losses for business cards run 20 percent to 30 percent higher than with consumer cards.

• Small business owners use credit cards, but only a small percentage (18 percent) carry a balance. By contrast, about four in 10 households carry a balance on a consumer card.

• Approximately 20 percent of small business owners tried to get a credit card in 2009; four out of five of them sought a business (as opposed to a personal) credit card. Of those, about three-fourths were approved. One third of small business owners tried to get a line of credit or a loan at a bank; half of them were successful.

The Federal Reserve concluded that business owners would benefit from having the same types of protection that consumers have under the CARD Act. However, the Fed said it's not apparent that the benefits of extending the CARD Act to small business "outweigh the potential risk of increased cost and reduced credit card availability for small businesses."

Loretta Hunnicutt

Data Breaches Due To Ignoring Security Fundamentals

2010-08-03T18:30:00.004-04:00

Most of the security breaches in 2009 could have been avoided if security fundamentals had been implemented, according to the Verizon Data Breach Investigations Report, produced in collaboration with the U.S. Secret Service. Criminals are employing advanced data-mining data methods to build more complete identities by "stealing data from public and private data sources that contain both sensitive financial data, as well as other identifiers like health insurance numbers, diagnosis, personal information from social Web sites like Facebook.

According to the annual report, eighty-five percent of all stolen data last year was the work of organized crime; out of 143 million records compromised in 2009, 85 percent of them stemmed from financial service incidents. In addition to organized crime, there was greater incidence of breaches attributable to insiders and social engineering. Financial services accounted for a third of the cases investigated, while hospitality made up 23 percent and retail 15 percent.

Loretta Hunnicutt

The Rejection of Mobile Commerce

2010-07-23T12:55:00.006-04:00

Forrester Research recently conducted a survey of more than 14,000 European online adults. Findings include the rejection of mobile commerce in Europe. Adoption rates for mobile payments remains very low, and just 2 percent of respondents reported purchasing products from their mobile phone and only 5 percent are actually interested in doing so.

Browsing for products and services is the most popular commerce-related activity on a mobile device, however only 7 percent of online buyers purchase items. European studies indicate that shopping is becoming less and less popular as an activity with an emphasis on more focused purchasing.

MSRN research has found that as the trend to a devotion to local commerce increases and the growing lack of interest in purchasing novelty items increases purchasing items through mobile commerce will not follow suit. Traditional credit and debit card purchases should remain the preferred payment solution, with the growth of debit and stored value cards purchases increasing at much faster rates.

Loretta Hunnicutt

Visa Announces New Security Effort to Ease Burden on Merchants

2010-07-20T17:00:00.003-04:00

A new security effort by Visa has been launched which could make it unnecessary for merchants to store the full, 16-digit debit and credit card numbers on their systems.

Issuers and acquiring banks can accept truncated, disguised, or otherwise concealed card numbers from merchants for dispute resolution cases. Visa in the new initiative will urge, “card issuers, acquirers, and processors to adopt systems that do not rely on primary account number (PAN) data for dispute resolution and other issues,” says Visa's Eduardo Perez. It has not been mandated that merchants store PAN data, however it did require them to safeguard the data in compliance with PCI Data Security Standards.

A series of best practices for tokenization has also been announced by Visa; PAN data is replaced by a set of proxy numbers that can then be employed for dispute resolution and other purposes. Perez says, “that for now Visa is only recommending that processors and banks implement the changes as part of an overarching effort to enhance security, and is also asking them to consider storing the PAN data themselves rather than mandating that retailers do it.”

Check here again for an update on the best practices for tokenization by Visa.

Loretta Hunnicutt

PCI Compliance May Lead to Unnecessary Expense

2010-07-13T17:04:00.014-04:00

Merchants around the country are receiving panicked letters and phone calls from their credit card processors telling them they need to buy new PCI compliant terminals with offers on great leasing deals or free terminals. Merchants must not panic and must do their homework. Times are tough; don’t make them tougher with rash decisions and unnecessary expenditures.

First, merchants must find an objective source for information. Terminals last forever so you might just be using a dinosaur that has been fine all these years, but not secure. Find out if the equipment you currently use, is in fact not PCI compliant. MSRN received a panicked post from a reader who said that their processor was insisting that they replace all seven of their terminals. After contacting MSRN, the merchant discovered that their terminals were PCI compliant, and that most terminals if purchased new within the last year are in fact PCI complaint.

Second, if you do discover after diligent research that your terminals are in fact obsolete consider your options. Top credit card processors will offer inexpensive terminals with no strings attached. Leasing should be your last choice. The markup on leasing is often astronomical and in the long run far too expensive for even the most successful small merchant. One poster reported that he signed a 36 month lease for a terminal that was already so old it fell out of service one month after he signed his lease. He was on the hook for three years with a terminal that could not be served by other processors. Every month for three years he paid $40 for a terminal he could not use. Always ascertain if the deal with your processor includes a proprietary terminal, if so think twice; do you really want to make that kind of commitment? Should you? Find a processor who does not require long term contacts and has NO cancellation fees.

Small merchants must remember that PCI compliance is only as good as everyone along the communication and access lines. There are frauds and thieves all along the way spending more time on figuring out ways to cheat the system than you do protecting yourself. Take precautions and learn the do’s and don’ts of good credit card acceptance practices. Knowledge will protect you from the high costs of fraud and can reduce your credit card acceptance costs.

Coming soon…. Credit Card Acceptance Best Practices Series for Small Merchant

MSRN does not endorse any products or processors.

Loretta Hunnicutt

Fraud Costs Businesses in UK £400K Each

2010-06-28T17:04:00.005-04:00

According to the 2010 U.K. Online Fraud Report, an average of 400,000 pounds was lost by British businesses due to online fraud last year. Losses from online fraud of as much as 1.8 percent of revenues are expected. Merchants are becoming aware and are taking proactive measures such as using Verified by Visa, MasterCard SecureCode, and other authentication systems. Te report finds that card payments are three times as high as other forms, and that “71 percent of British consumers will not shop online due to safety concerns.”

Over 70 percent of British merchants plan to review online orders for signs of fraud from here on out and slightly less than 60 percent said that they will review online orders for signs of fraud. Unfortunately only 5 percent said that they planned to check every online order manually.

Merchants need to become aware of fraud, and the high costs associated with it. Too many merchants are paying too much in extra fees for PCI compliance services while neglecting their own security and fraud prevention.

Loretta Hunnicutt

Three Year Extension Granted By PCI Council (PCI/DSS)

2010-06-24T18:26:00.003-04:00

Three Year Extension Granted By PCI Council (PCI/DSS)

The PCI Security Standards Council has allowed merchants and others more time to assess and facilitate their compliance with payment card security standards. The standards are issued by the PCI Security Standards Council, and the council decided to extend the standards review and issuance cycle from two years to three. "It gives us the ability to gather a lot more feedback, and consider market dynamics and emerging threats." PCI council general manager Bob Russo continued, “It gives merchants more time to understand [the standards.

The PCI Security Standards Council will issue its updated PCI Data Security Standard (DSS) this October on schedule, but it will not go into effect until Jan. 1, 2011. DSS and the Payment Application DSS and PIN Transaction Standard will also switch to a three-year cycle in the future as. The current version of PCI/DSS will be officially retired after Dec. 31, 2011. The 14-month phase-out allows retailers currently doing a PCI DSS 1.2 evaluation to continue the process. Standards updates should end in the April to August 2012 timeframe and the summary of revisions concluded in the May to July 2013 timeframe.

While PCI/DDS compliance is essential, it is important for merchants and the general public to understand that any technology in the wrong hands can lead to fraud. As one safeguard is created, the crooks find a way around it. Check out all service providers before entering into any agreements.

Loretta Hunnicutt

New Credit Card Rules Benefit Consumers

2010-06-21T11:51:00.003-04:00

New rules that restrict credit card fees will go into effect Aug. 22 according to a Federal Reserve announcement. The amount credit card companies can charge cardholders who make a late payment, is capped at $25, down from the current $39. Credit card companies will be prohibited from charging a fee that is more than the amount of the late payment or other violation. Credit card companies will not be allowed to charge inactivity fees or several different fees for a single violation. Next month, new disclosure requirements will take effect, as a result of the, “most sweeping overhaul of the industry since the invention of credit cards," says the American Bankers Association's Kenneth Clayton.

Credit Card Payment Fraud Indictments for Bankcard Empire Owner

2010-06-09T20:42:00.003-04:00

Leslie Spencer Mersky of Scottsdale was indicted on charges of fraud and related crimes Tuesday after a search warrant was served on his business, Bankcard Empire of Phoenix. The indictment alleges that Mersky told employees to cut and paste signatures from customers into unauthorized credit card payments. Officials said that there have been numerous consumer complaints about Bankcard Empire.

The 64-year-old Scottsdale man made fraudulent charges to customers' credit card accounts after selling them expensive "business opportunity packages" through the Internet, according to the Arizona Attorney General's Office.

Authorities served a search warrant on the business two months ago, and Mersky was indicted on charges of fraudulent schemes and artifices, forgery,theft and aggravated identity theft.

Loretta Hunnicutt

Goddard Announces Indictment of Bankcard Empire Owner

2010-06-01T10:54:00.000-04:00

Goddard Announces Indictment of Bankcard Empire Owner

Attorney General Terry Goddard today announced that Leslie Spencer Mersky, 64, of Scottsdale, has been indicted on charges of fraudulent schemes and artifices, forgery, theft and aggravated identity theft.

Mersky is the owner of Bankcard Empire of Phoenix, which sold business opportunity packages that often required large upfront fees over the Internet.

Mersky is accused of making fraudulent charges to the credit card accounts of purchasers of Bankcard Empire’s work-at-home business opportunities sold over the Internet. Bankcard Empire has long been the subject of many consumer complaints about its business practices. The indictment alleges that at Mersky’s direction, employees of Bankcard Empire would cut and paste the signatures of purchasers of Bankcard’s products into unauthorized credit card payment authorizations.

Bankcard Empire was the target of a search warrant executed two months ago. The U.S. Postal Service, Tempe Police, Phoenix Police, the Arizona Corporation Commission and the Arizona Attorney General’s Office were involved in the investigation.

This case is being prosecuted by Assistant Attorney General Michael Flynn in Maricopa County Superior Court.

FBI Advice: Avoiding Credit Card Fraud

2010-05-27T17:50:00.002-04:00

The safest way to purchase items via the Internet is by credit card because you can often dispute the charges if something is wrong.
Make sure the transaction is secure when you electronically send your credit card numbers.

You should also keep a list of all your credit cards and account information along with the card issuer’s contact information. If anything looks suspicious or you lose your credit card(s) you should contact the card issuer immediately.

Don't give out your credit card number(s) online unless the site is a secure and reputable site. Sometimes a tiny icon of a padlock appears to symbolize a higher level of security to transmit data. This icon is not a guarantee of a secure site, but might provide you some assurance.

Don't trust a site just because it claims to be secure.

Before using the site, check out the security/encryption software it uses.

Make sure you are purchasing merchandise from a reputable source.

Do your homework on the individual or company to ensure that they are legitimate.

Try to obtain a physical address rather than merely a post office box and a phone number, call the seller to see if the number is correct and working.

Send them e-mail to see if they have an active e-mail address and be wary of sellers who use free e-mail services where a credit card wasn’t required to open the account.

Consider not purchasing from sellers who won't provide you with this type of information.

Check with the Better Business Bureau from the seller’s area.

Check out other web sites regarding this person/company.

Don’t judge a person/company by their web site.

Be cautious when responding to special offers (especially through unsolicited e-mail).

Be cautious when dealing with individuals/companies from outside your own country.

Loretta Hunnicutt

U.S. Cost of Data Breach Highest In The World

2010-05-07T16:49:00.005-04:00

A Ponemon Institute study examined breach costs in the United States, the United Kingdom, Germany, France, and Australia. Among the findings; data breaches in the United States could cost companies twice as much as they do countries with less stringent disclosure and notification laws. For example in the US, the cost per lost record was 43 percent higher than the global average.

In July of 2009, equivalent laws were passed Germany and costs were the second highest at 25 percent above the worldwide average. Australia, France, and the U.K., where data breach notification laws have yet to be introduced, all had costs below the world average. The study sited that one major reason for the high cost "is that U.S. companies are required to notify customers of their breaches, even if they only suspect that the customers'records might be affected."

Loretta Hunnicutt

FTC: Advance-Fee Loan Scams

2010-04-28T09:48:00.004-04:00

The FTC (Federal Trade Commission) released important information in these difficult economic times. This information is relelvant to small business owners who are searching for capital. The scam targets the very people who are most vulnerable. Much like pay day loans the cost of doing business with theses scammers is too high for any business to pay.

Advance-Fee Loan Scams: ‘Easy’ Cash Offers Teach Hard Lessons

Looking for a loan or credit card but don’t think you’ll qualify? Turned down by a bank because of your poor credit history?

You may be tempted by ads and websites that guarantee loans or credit cards, regardless of your credit history. The catch comes when you apply for the loan or credit card and find out you have to pay a fee in advance. According to the Federal Trade Commission (FTC), the nation’s consumer protection agency, that could be a tip-off to a rip-off. If you’re asked to pay a fee for the promise of a loan or credit card, you can count on the fact that you’re dealing with a scam artist. More than likely, you’ll get an application, or a stored value or debit card, instead of the loan or credit card.

The Signs of an Advance-Fee Loan Scam

The FTC says some red flags can tip you off to scam artists’ tricks. For example:

A lender who isn’t interested in your credit history. A lender may offer loans or credit cards for many purposes — for example, so a borrower can start a business or consolidate bill payments. But one who doesn’t care about your credit record should give you cause for concern. Ads that say “Bad credit? No problem” or “We don’t care about your past. You deserve a loan” or “Get money fast” or even “No hassle — guaranteed” often indicate a scam.

Banks and other legitimate lenders generally evaluate creditworthiness and confirm the information in an application before they guarantee firm offers of credit — even to creditworthy consumers.

Fees that are not disclosed clearly or prominently. Scam lenders may say you’ve been approved for a loan, then call or email demanding a fee before you can get the money. Any up-front fee that the lender wants to collect before granting the loan is a cue to walk away, especially if you’re told it’s for “insurance,” “processing,” or just “paperwork.”

Legitimate lenders often charge application, appraisal, or credit report fees. The differences? They disclose their fees clearly and prominently; they take their fees from the amount you borrow; and the fees usually are paid to the lender or broker after the loan is approved.

It’s also a warning sign if a lender says they won’t check your credit history, yet asks for your personal information, such as your Social Security number or bank account number. They may use your information to debit your bank account to pay a fee they’re hiding.

A loan that is offered by phone. It is illegal for companies doing business in the U.S. by phone to promise you a loan and ask you to pay for it before they deliver.

A lender who uses a copy-cat or wanna-be name. Crooks give their companies names that sound like well-known or respected organizations and create websites that look slick. Some scam artists have pretended to be the Better Business Bureau or another reputable organization, and some even produce forged paperwork or pay people to pretend to be references. Always get a company’s phone number from the phone book or directory assistance, and call to check they are who they say they are. Get a physical address, too: a company that advertises a PO Box as its address is one to check out with the appropriate authorities.

A lender who is not registered in your state. Lenders and loan brokers are required to register in the states where they do business. To check registration, call your state Attorney General’s office or your state’s Department of Banking or Financial Regulation. Checking registration does not guarantee that you will be happy with a lender, but it helps weed out the crooks.

A lender who asks you to wire money or pay an individual. Don’t make a payment for a loan or credit card directly to an individual; legitimate lenders don’t ask anyone to do that. In addition, don’t use a wire transfer service or send money orders for a loan. You have little recourse if there’s a problem with a wire transaction, and legitimate lenders don’t pressure their customers to wire funds.

Finally, just because you’ve received a slick promotion, seen an ad for a loan in a prominent place in your neighborhood or in your newspaper, on television or on the Internet, or heard one on the radio, don’t assume it’s a good deal — or even legitimate. Scam artists like to operate on the premise of legitimacy by association, so it’s really important to do your homework.

Finding Low-Cost Help for Credit Problems

If you have debt problems, try to solve them with your creditors as soon as you realize you won’t be able to make your payments. If you can’t resolve the problems yourself or need help to do it, you may want to contact a credit counseling service. Nonprofit organizations in every state counsel and educate people and families on debt problems, budgeting, and using credit wisely. Often, these services are low- or no-cost. Universities, military bases, credit unions, and housing authorities also may offer low- or no-cost credit counseling programs. To learn more about dealing with debt, including how to select a credit counseling service, visit ftc.gov/credit.

Where to Complain

If you think you’ve had an experience with an advance-fee loan scam, report it to the FTC.

The FTC works to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. Watch a new video, How to File a Complaint, at ftc.gov/video to learn more. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

Loretta Hunnicutt

Voluntary Credit Card Code

2010-04-22T17:59:00.001-04:00

Jim Flaherty, Canadian finance minister issued a new voluntary code of conduct for credit card companies. Merchants will now receive information concerning fees and rates charged by card firms when their cards are used for payment, and will be given advance notice of any hikes or new charges. Merchants will be allowed to terminate a contract without penalty if new fees are introduced.

Under the code, merchants will be allowed to accept credit cards from a specific network without being forced to accept that same company's debit cards. Flaherty warned that though the code of conduct is voluntary, non-compliance by card companies could spur the Canadian government to institute regulation. This volutary code is being issued as credit card companies mount a push to capture a share of the debit card market, which constitutes 60 percent of all card payments in Canada.

Loretta Hunnicutt

Hotels Targeted By Credit Card Hackers

2010-04-08T15:42:00.002-04:00

According to a very interesting article in the New York Times, by Joe Sharkey, “Fraud experts say hackers frequently steal personal data and make multiple small charges to authenticate a card, see how vulnerable it is, and test the watchfulness of the cardholder before making bigger charges. Credit card breaches often take place for months without being discovered by the hotel, and by customers who may travel frequently and not scrutinize card activity reports.” According to a study conducted by Trustwave, “Nearly 40 percent of credit card hacking cases in 2009 involved the hotel industry, versus 19 percent involving the financial services industry and 14.2 percent the retail sector. The Trustwave study also noted that, “organizations of all sizes are implementing new technology without considering fundamental security threats.”

The Time's article cites information from security investigator Anthony C. Roman who addresses the fact that hotels are particularly attractive to credit card hackers because they can use very simple methods to steal the greatest volume of card data. “Most of the chronic security breaches in the hotel industry are the result of a failure to equip, or to properly store or transmit, this kind of data, and that starts with the point-of-sale credit card swiping systems," Roman says.

Loretta Hunnicutt

Coming Soon to an On-line Casino Near You?

2010-03-29T19:04:00.005-04:00

Efforts to legalize Internet gambling are ramping up. Some in the credit card industry and other advocates claim that legalization would add up to billions of dollars in tax and licensing revenue for the federal government. Horse racing organizations also advocated for changes after some credit card companies refused to process online pari-mutuel wagers, which were supposed to be excused from the new restrictions.

The Unlawful Internet Gambling Enforcement Act of 2006 prohibits U.S. banks from accepting payments from credit cards, checks, or wire transfers to settle online bets. The act was supposed to take effect on Dec. 1, 2009, but a delay was urged by gambling interests, banks, and other financial institutions that argued that the law was opaque and non-enforceable. A bill supported by Rep. Jim McDermott (D-Wash.) would levy a 2 percent tax on gambling deposits, which backers say could bring in $42 billion in tax revenue over a decade. A more controversial proposed bill by Rep. Frank (D-Mass.) maintains the illegality of online sports betting as it sets up federal oversight of online gambling firms in return for five-year licenses, and would include protections aimed at deterring underage players, compulsive gamblers, and criminal activity.

Masih Madani, ebsg, and Innovative Bank

2010-03-08T13:31:00.051-05:00

Update:

Previously posted 12/03/09: According to court documents, losses from stored value cards could exceed $80 million. These losses could have been prevented had other financial institutions performed to industry standards.

Mr. Madani admitted his theft to one of his lenders, and did not deny it when an investor inquired as to the Orange County Court Case. Court documents claim, 'Mr. Madani admitted to bank officers of the bank's corporate counsel that he and Opus had improperly taken over $3 million in ACH funds while Innovative Bank served as the ODFI for Mr. Madani, Opus, and possibly others. As a result of learning that Mr. Madani had stolen ACH money, FVAB instituted immediate action to stop any and all transactions related in any way to Mr. Madani.' FVAB acted immediately and appropriately.

Mr. Madani approached a bank with a request that it perform other banking services. Mr. Madani represented that there was a large market for banks to issue Stored-Value Cards. These cards represent money on deposit with the issuer, and are similar to debit cards. One major difference between Stored-Value Cards and debit cards is that debit cards are usually issued in the name of the individual account holders, while Stored-Value Cards are usually anonymous……"

UPDATE:

Many of Madani's card programs are now being offered by Western Commercial Bank.

Kucinich Announces Credit Cards That Don’t Cost You Your Legal Rights

2010-02-03T13:13:00.004-05:00

PRESS RELEASE

Congressman Dennis Kucinich (D-OH) released the following statement:

“.......Until now, all major banks have required their customers – through provisions hidden in the fine print of credit card agreements -- to give up their constitutional right to their day in court. Those agreements have required customers to settle their disputes through a process called arbitration. In July, the House Domestic Policy Subcommittee, of which I am the Chairman, held a hearing in which we showed that mandatory arbitration is arbitrary, and that results depend more on the arbitrator to whom the case is assigned than on the facts or the law that applies.

“Since that hearing, my staff has been communicating with all the major banks, and today I can announce that six of those banks will not have arbitration clauses in their new credit card agreements. Those banks are JPMorganChase, CapitalOne, PNC Bank, TD Bank, Bank of America and Regions Bank. I want to congratulate those banks for their decisions.

“I particularly want to congratulate JPMorganChase and CapitalOne. Those two banks will be issuing new credit card agreements that also allow their customers the right to a jury trial and the right to participate in a class action. I strongly encourage the other banks to follow their lead.

“For the first time in years, you can choose what credit card to use by considering all its terms—interest rate, minimum payment, fees, rewards, and whether it requires you to give up your right to use the courts that our state and federal Constitutions have created for you.”

Credit Card Arbitration Against Interests of Ordinary Citizens

2010-02-02T16:08:00.004-05:00

The Minnesota Attorney General reached a settlement that required National Arbitration Forum (NAF), to stop taking consumer-debt cases, and the American Arbitration Association declared that it would follow suit. This settlement was a result of a lawsuit against the National Arbitration Forum by Minnesota Attorney General, Lori Swanson, Minnesota attorney general. The suit claimed that “The NAF works behind the scenes—alongside creditors and against the interests of ordinary consumers—to convince credit card companies to insert arbitration provisions in their customer agreements and then appointing the Forum to decide the disputes. The lawsuit alleges that the Forum pays commissions to executives whose job it is to convince creditors to put mandatory arbitration clauses in their customer agreements. The Forum does this to generate arbitration filings in the Forum—and hence, revenue—for itself.”

In most credit cardholder agreements there are arbitration clauses. When a cardholder agrees to those terms they have waived their right to file a lawsuit and have agreed to submit any dispute to arbitration. This arbitration is usually conducted by one of three companies: the National Arbitration Forum (NAF), Judicial Arbitration and Mediation Services (JAMS), and the American Arbitration Association. Arbitration is supposed to save both the card company and the cardholder court costs, and both parties benefit from an unbiased arbiter.

The arbiters and the creditors had a stake in the game and very few consumers used the arbitration option for many reasons. One reason could be that a 2007 study by Public Citizen of cases brought over a four-year period in California before NAF found that consumers lost 94% of the time. So it was the “creditors who brought the vast majority of claims,” says Ben Wogsland, a spokesman for the Minnesota AG’s office. Creditors would hire Axiant law firms who would send the cases to the NAF where “neutral” arbitrators would find in favor of the credit card companies (or cell phone carriers). NAF “made representations that aligned itself against consumers, including, for example, that ‘(t)he customer does not know what to expect from arbitration and is more willing to pay.”

Rep. Dennis Kucinich’s (D, Ohio) office is working on a bill to reform arbitration. In a staff report, Rep. Kucinich exposed NAF’s issues: arbitrators decided cases without any evidence, they ignored pro-consumer evidence, and they failed to dismiss cases that creditors filed beyond deadlines. Kucinich’s office must stay committed to protecting the consumer especially in light of the proliferation of stored value cards aimed at minority and disadvantaged populations.

Loretta Hunnicutt

Interchange Is About to Change

2010-01-31T19:43:00.003-05:00

In 2008, merchant-paid swipe fees amounted to $62.7 billion, up 3% over the previous year, according to the Nilson Report, a payment industry web newsletter.
Some of these fees are on the rise. The domestic credit-card interchange rate -- a transfer fee set by issuers such as Visa and MasterCard, but paid to the cardholder's financial institution every time a Visa or MasterCard payment product is used -- rose from between 1.25% and 1.91% in 1991 to between 0.95% and 2.95% in 2009. MasterCard's rate also jumped from between 1.30% and 2.08% to between 0.90% and 3.25% last year, according to a recent Government Accountability Office report about credit cards. Processing fees have also been added to debit-card purchases, which in the past, were free for merchants to process.
Why the widening gap in the interchange rate? The GAO's interchange rate fee analysis concludes that several of the networks' higher interchange fee rates increased during this period. At the same time, rates on other cards, which had lower-cost incentive rates for sectors that previously did not take cards, also increased. (Note that debit-card purchases, which account for roughly 70% of Visa transactions in the U.S., were not included in the GAO study.)

The Secret is Out: Merchants Take a Stand

2010-01-25T12:04:00.004-05:00

It is a poorly kept secret, or widely held belief throughout the merchant service industry that the big card brands push signature-based transactions over PIN-based ones at merchant locations to generate the higher interchange fees that signature transactions carry. The only ones who do not know the secret are the small merchants. Well the big retailer, Best Buy may have changed that for all merchants, they are boycotting Visa.

Best Buy Inc. has staged a boycott of Visa’s fee structure by refusing the acceptance of Visa contactless payment cards. According to Greensheet, “Analysts say Best Buy's decision is evidence of growing merchant discontentment over card acceptance rules.” Best Buy will continue to accept contactless cards from other brands and mag stripe Visa cards.

In a statement responding to the matter, Visa said: "While we're disappointed Best Buy will no longer offer its customers the convenience and speed of Visa payWave (contactless technology), it's important for cardholders to know they can continue to use their payWave card with a traditional swipe when shopping at Best Buy and millions of other merchant locations worldwide. Visa values its long-standing relationship with Best Buy, and we look forward to working with the retailer to grow our mutual businesses."

Industry insiders have long argued that card company policies that appear to encourage signature transactions are detrimental security and increase the chances for data theft and fraud. PIN transactions are far superior in protecting consumer data, but the revenue generated for the card companies is greatly reduced. The relatively high fraud rates associated with signature transactions are supposed to be offset by the higher interchange fees attached to signature-based card purchases. Of course those higher rates are paid by the merchants to the card companies.

Even if, as some say the boycott is strictly symbolic, it is likely to be the start of something big. As merchants are becoming more aware they growing more vocal in their dissatisfaction over payments industry interchange practices. According to the Greensheet, "It definitely ties into the legislation and things that are happening on Capitol Hill," said payments industry attorney Paul Rianda, referring to the ongoing push by merchant advocacy groups for federal legislation reforming interchange laws. "A lot of groups are unsatisfied with the whole concept of how they're accepting credit cards. This is another way they're showing their displeasure about having to accept a more costly form of payment."

Things may change for a change

Essential Information on Stored Value Cards

2010-01-22T23:35:00.003-05:00

The proliferation of stored value cards and the various issues they present is covered in a comprehensive roundtable discussion on of stored value cards and other prepaid products conducted by the Federal Reserve System's Payments System Development Committee (PSDC). The roundtable participants included “twelve industry experts, representing retailers, processors, networks, banks, and the legal profession, provided the PSDC with insights into these developing payment instruments.” According to the Federal Reserve System's Payments System Development Committee (PSDC), “the participants discussed three overarching issues: the business case for prepaid cards, infrastructure issues, and the legal and regulatory environment.” This overview contains essential information for all business that accept or offer stored value cards.

A Summary of the Roundtable Discussion on Stored-Value Cards and Other Prepaid Products

http://www.federalreserve.gov/paymentsystems/storedvalue/

Card Fraud Costs $8.6 Billion Per Year

2010-01-18T00:17:00.006-05:00

An estimated $8.6 billion in loses annually will be incurred by the U.S. card payments industry, according to the Aite Group. Analysts from Aite state that combating card fraud involves anticipating scammers' next moves based on rapid technological advancements, and choosing which anti-fraud campaigns to wage. Prohibitively expensive deployment costs and the elimination of signature interchange makes the universal upgrading of U.S. card technologies unlikely. The Aite analysts cite end-to-end encryption as the most practical contemporary technique for ameliorating card fraud, in view of the relative speed and cost efficiency for implementation. "Criminals need access to deep seams of card data," says Aite analyst and report author Nick Holland. "Cutting off the supply of data via a national-level deployment of end-to-end encryption would significantly reduce counterfeit and lost and stolen card fraud."

Visa, MasterCard, American Express, Discover

2010-01-13T09:54:00.004-05:00

Every day consumers are offered more and more choices in cards. Stored value, gift, credit, and charge cards abound. Visa, MasterCard, American Express, Discover, Diners, and too many unbranded prepaid cards to count. Get informed. Read Merchant Service Reports.

Check the Fine Print on Bank Gift Cards

2009-12-23T01:12:00.005-05:00

The holiday season is the gift giving season. When it comes to gift cards the consumer should double check and read the fine print. More than 95 percent of us have given or received at least one gift card, which is up from 2007 when more than 60 percent of people surveyed said they planned to give a card that year. According to Consumer Reports, gift card sales were predicted to reach $87 billion this year, as they are the most desired gift among women.

It is the bank cards that tend to charge more fees than retailer cards. American Express dropped its fees in October, but had charged $2 a month on cards that were more than a year old. The branded cards do not eagerly share the expensive and fine print. An example is the iCard Visa gift card which imposes a $25 charge every six months after the card is six months old. While bank cards offer the card user the flexibility to purchase at a wider range of retailers, but the costs can devalue of the card if it's not used quickly. In a Consumer Reports survey, it was noted that more than a fourth of the people who receive gift cards for the holidays do not use them within a year.

Gift cards are the most beneficial to sellers, not gift recipients. The current "lost value" of those unused cards is estimated by the Tower Group to be $5 billion. Bank cards are not the best value for your money primarily because the fees are tacked on the initial purchase of the card. Banks make considerable money from fees on the cards. They penalize the purchaser due to the fact that the accounting for unused gift cards is high, and they pass it on to the consumers. Until restrictions of gift cards by the Federal Reserve disallow the expiration of cards for at least five years, disallow maintenance charges before the card is one year old, and require obvious notification of fees bank issued bank cards are not the best choice.

Gift cards are convenient as well as desired however; some of the cards come with features that are less than desirable. Early expiration dates or monthly fees can quickly devalue the cards. The Los Angeles Times has noted, “That's led to their reputation as the gift that keeps on taking.”

Masih Madani, FVAB, Innovative Bank

2009-12-03T18:12:00.046-05:00

Update:

Failed O.C. bank says it lost millions to high-tech fraud
By RONALD CAMPBELLA

Los Angeles County businessman is accused of stealing at least $3.5 million in a high-tech skimming operation at an Orange County bank seized last month by federal regulators.

The failure of Westminster-based First Vietnamese American Bank cost the Federal Deposit Insurance Corporation $9.6 million.

Some 300 businesses and nonprofits have sued the bank and Chatsworth businessman Masih Madani, alleging Madani stole their money under the bank's nose. First Vietnamese in turn has sued Madani and a second failed institution, Oakland-based Innovative Bank.

The cases shed light on the vast but little-known Automated Clearinghouse, which handled nearly $20 trillion in 2009 alone. Operating through the Federal Reserve Board, banks and "third-party processors" such as Madani's company, Opus Ventures, individuals and companies make billions of payments each year.

You probably use the system to automatically deposit your paycheck or Social Security check or automatically debit your mortgage or gym fee from your bank account.

For the rest of the article go to http://articles.ocregister.com/2010-12-08/news/25185657_1_bank-account-first-vietnamese-american-bank-orange-county-bank

According to court documents, losses from stored value cards could exceed $80 million. While MSRN finds this amount highly unlikely, these losses could have been prevented had other financial institutions performed to industry standards as did FVAB. FVAB acted swiftly to prevent losses and end the fraud including the fraud perpetrated on innocent card holders.

Court documents claim, "Mr. Madani admitted to officers of FVAB and to FVAB’s corporate counsel that he and Opus had improperly taken over $3 million in ACH funds while Innovative Bank served as the ODFI for Mr. Madani, Opus, and possibly others. As a result of learning that Mr. Madani had stolen ACH money, FVAB instituted immediate action to stop any and all transactions related in any way to Mr. Madani."

"Mr. Madani approached FVAB with a request that it perform other banking services. Mr. Madani represented that there was a large market for banks to issue Stored-Value Cards. These cards represent money on deposit with the issuer, and are similar to debit cards. One major difference between Stored-Value Cards and debit cards is that debit cards are usually issued in the name of the individual account holders, while Stored-Value Cards are usually anonymous……

Chargebacks, PCI/DSS Compliance and Credit Card Fraud

2009-11-26T15:34:00.004-05:00

Are chargebacks destroying your profit?

Is your service provider htting you with high PCI Compliance fees?

Has someone used your credit card?

Do you trust that stored value card, do you know your user fees?

From chargebacks to credit card fraud, from good deals to bad actors, we at MSRN are on your side. Don't let the next small business owner or cardholder get ripped off. Let us know of your experiences, they just might not happen to the next cardholder or small merchant. Post your questions and concerns, our experts are ready to help.

Loretta Hunnicutt

FBI Warns That ACH Fraud Is Rising

2009-11-09T11:37:00.007-05:00

A new FBI alert has been issued that warns small businesses, municipal governments, and schools about a significant increase in automated clearinghouse (ACH) fraud, in which cybercriminals are stealing millions of dollars from organizations through an ongoing cyber attack. As part of this attack, cybercriminals send an email to a business or organization's bookkeeper or financial officer that aims to trick them into downloading keylogging software. If the business or organization uses an online banking service, the cybercriminal can use the software to steal the victim's login credentials and create ACH transfers to "money mules," or people who are tricked into transferring the money overseas where it cannot be found. As part of the scam, cybercriminals also are launching distributed denial-of-service attacks against ACH processors in order to prevent them from recalling transfers before the funds can be sent overseas. The FBI says cybercriminals have attempted to steal roughly $100 million through this scam. The bureau notes that cybercriminals are primarily attacking organizations that tend to work with smaller regional banks, which are often not capable of stopping the fraudulent ACH transfers. Compounding the problem is the fact that some banks do not have proper cybersecurity measures in place to protect against this attack, the FBI says.

Seeking information about Masih Madani, HMSBlue, Inadam, Transysa Information Wanted

2009-10-01T00:42:00.006-04:00

ONCALDERA CORPORATION
Number: C1776892
Jurisdiction: California

MADANI & COMPANY INCORPORATED
Number: C2136263
Jurisdiction: California

DARIUS ENTERPRISES, LLC
Number: 200626910114
Jurisdiction: CALIFORNIA

Opus Ventures
Domestic Corporation
C24738-2002

Inadam
Domestic Corporation
C3535-2001

Transysa
Domestic Corporation
E0710102005-0

Board Of Directors (June 2009)

Masih Madani

M Farley

K Maynard (representing the employees)

M Madani (representing Darius)

Unknown Board Member (representing Madani & Company)

W Smith (independent retired insurance executive)

Got Q LLC
Domestic Limited-Liability Company
E0092192008-3

Woopay, INC.
Domestic Corporation
E0435312009-5

Board of Directors (Nevada Secretary of State)

Director - FREDERIC DRZEWOWSKI

Director - PHILIPPE ERB

Treasurer - MASIH MADANI

Director - MASIH MADANI

Vice-President - MASIH MADANI

President - STEVE SMITH

Quantic Service Group, Mycropay, Mycropod, EBSG, Xmoola, TravelersCash, Remesa Global, Pin Pago, HMSBLUE, ephilanthropist

merchantservicereports@gmail.com

UPDATE

From Orange County Court Case 30-2008-00113102-CU-BT-CJC

UPDATE

According to a website found on 01/31/10

Masih Madani - President and CEO of Transysa

Mr. Madani founded TRANSYSA in April, 2005 with the technology and experience of OPUS Financials, its sister company. Mr. Madani is also the founder, President and CEO of Oncaldera, another wholly owned subsidiary of OPUS. In January 1999, Mr. Madani accepted the position of Chief Technology Officer & Chief Information Officer at iPayment, Inc. (NASDAQ: IPMT) as a result of iPayment purchasing vIstore and other e-commerce intellectual property from vIstore corporation (a wholly owned corporation of Mr. Madani founded in 1996.). At iPayment, Mr. Madani was responsible for the design and implementation of iPayment's Transaction Processing Gateway (TPG), iPayment's secure Internet gateway that interfaces with the merchant's web site to process credit card transactions, Ka-Chingg, web-based, low cost alternative designed to provide small merchants with a simple and more efficient way to enter and authorize credit card transactions in real-time without using a physical Point of Sale (POS) device, and VERIFY-MY-ID risk / fraud authentication software that can identify a credit card holder and their corresponding social security number.

Sorting Through A Merchant Service Statement: Find Those Hidden Costs

2009-09-11T09:00:00.001-04:00

When you first signed-up for a merchant service account, you were inundated with sales pitches from everywhere. Your service representative promises were fantastic. How could you have been so smart, or so lucky? At least that is what some merchants think before they get their first statement. Those merchants find themselves saying things like, "The rep said they offered the lowest prices, and yeah, he did mention that there would be a statement fee, and a monthly minimum, but those are to be expected, what are all the other costs, for signing up for a lower rate why am I not keeping more of my money, what is up? "They promised next day deposits, but these rates I am being charged are absolutely NOT worth it, I am finding a new processor now."

Paying bills is not fun. Paying for something that you did not agree to buy is maddening. Not understanding what exactly you are paying for is just wrong. Merchant statements are frequently filled with cryptic codes and indecipherable jargon. Too often that is precisely what some banks or independent processors intended. If you can't read it, you may not notice that while you got a great rate quote, the fees they charged you are equal to or more than you saved on those deceptively lower rates. Many banks and processors lure the merchant in with low rates, and immediate deposits. Once you have been hooked the rate offered is now only an introductory rate or the cost of services outweigh the benefits of immediate deposits.

Merchant statements can be so complicated that it nearly impossible to assess you REAL costs. Every processor calls commonly expected fees by different names. It is important to understand what the expected and necessary fees are, and what fees can be avoided by finding a top quality processor. The most common fees are: Monthly Statement Fees Monthly Minimum Fees Chargeback Fees 12 B Letter Fees Transaction Fees Authorization & Capture Fees Return Transaction Fees Batch Fees Wireless Fees Customer Service Fees AVS, ARU, Electronic AVS, and Voice Authorization Fees Annual Fees Reprogramming Fees Set-up Fees

A top quality processor will not charge quite a few of these listed fees. Annual fees, reprogramming fees, set-up fees, can almost always be avoided. The rest of the fees will be charged outright to you, or the bank and processor will pass them on to you in other areas. Negotiate the fees with your processor. While many of these fees are set by the associations, the mark-up can be negotiated. Often processors will offer "interchange plus" fees. Depending on your type of volume and industry, credit card processing costs can be greatly reduced. However, as always be aware that banks and processors can pad other charges to you to make up the difference.

Monthly statements should contain your total daily card sales and the fees charged to process them. If you were informed correctly by your processor's sales representative, they quoted you a "qualified rate", a "mid-qualified rate", and a "non-qualified rate." The interchange you are charged for a transaction plus the processing costs will be reflected in your costs.

Far too often processors and banks do not inform merchants of the different rates a merchant may be charged. The merchant has been advised of the lowest rate, and not of the increase in rate they might pay when a transaction is "downgraded". Downgrade is the term used when a transaction is assessed a higher than "qualified rate." Reward credit cards and on-line transaction are charged a higher rate. Billbacks are used to hide higher interchange rates from the merchant. Some processors use something called ERR (earn reduce and recover), which is just another term for billback. Don't' fall for this scheme.

A processor will charge a low discount rate on all of a merchant's transactions in a given month, bill back the higher rates on transactions the following month. Billbacks are coded with a BB, or ERR. The processor is passing on the additional cost of handling those transactions without showing clearly the actual rate a merchant is charged. To estimate your actual rate, determine your average sales ticket (transaction) and multiply it by the number of transactions for a given billback or ERR, and divide the charge by the previous amount (ticket amount X number of transactions). The merchant can save tremendous money by negotiating lower rates for "mid-qualified" and "non-qualified rates." Don't let the sales representative get you to focus on the low "qualified rate" while ignoring the rates that cost you more and more, especially in light of the growing popularity of world and reward cards.

Banks and processors do not always pass on to merchants the savings of debit card use. Visa and MasterCard charge lower interchange fees when a customer pays with a debit card instead of credit. The processors, though, aren't required to pass these savings on to you. Quite the contrary, many sales people will actually use debit transactions as a very lucrative revenue stream.

Batch fees are common, and normally are very low, between $.20 to $.50 per batch or settlement. Most merchant settle their charges or "batch out" once a day. It is almost always in the merchant's best monetary interest to "batch out" within a 24 hour period after the sales transaction. Be weary of some processors who take a percentage of their fees when they reconcile your account at the end of each business day. The amount ("total card fees") is not a as it only treats all transaction as "qualified" and does not reflect the downgraded differences, transaction fees, and monthly fees etc.

Not All Cards Are Alike

2009-07-28T12:33:00.001-04:00

Before signing up for a stored value card or purchasing gift cards make sure you understand which bank or organization is offering the card, investigate the customer service history of the provider/sponsor, and read fully the terms and conditions of the card.

Not all branded cards are alike. Not all gift cards are alike. Depending on the bank sponsoring the branded cards, the card holder may have some of the protections and point of sale options available to MasterCard or Visa cardholders, but may pay very high fees and receive little or no customer service.

Cards both gift and pre-paid should state clearly the terms and conditions of the card and its use. According to a press release from the Comptroller of the Currency Administrator of National Banks, “If the disclosures are not stated on the card or packaging, check for a website or toll-free number for more information.” Make sure you know who to call if a card is lost or stolen. Check for expiration dates and fees for inactivity.

Experts at the office of the comptroller of the currency, who are responsible for regulating national banks, offer tips for buying and using gift cards at its web site at http://www.occ.treas.gov/issue.htm

Cyber Attack Incidences on the Rise

2009-06-13T12:20:00.001-04:00

The Internet Crime Complaint Center reports that cyber attack incidents have been on the rise, citing that claim that the FBI had witnessed a substantial increase in online banking fraud. MSRN earlier reported on the up tick in cyber attacks. Business must be proactive. Consumers can no longer carry the burden of the higher costs that are passed on as a result of criminal activity.

Industry professionals are proactively addressing the concern with plans from some to test their members' emergency response, notification, and communication procedures in response to a number of different types of cyber attacks against payment processes. The three-day exercise will simulate a different attack scenario each day.

To learn more go to: Financial Services - Information Sharing and Analysis Center

2009-05-27T13:49:00.001-04:00

Interesting Articles

Accept Credit Cards and Avoid Chargebacks

Accept credit cards for small business with ease. While top credit card companies may briefly advise and train merchants in credit card transacting, it is best for the merchant to learn everything they can about the security measures developed to guard against credit card fraud, and chargebacks. The best practice for accepting credit cards is to train all employees in the proper transaction protocols. Employers and employees who learn the "how" and "why" of accepting credit cards can save a tremendous amount of money and time. These security and cost saving methods for accepting credit cards should be followed closely and consistently. If followed carefully and faithfully, merchants can spare themselves the aggravation and expense of thieves and disgruntled customers.

Small businesses accepting credit cards should, in the case of fraud, contact their credit card processor as soon as possible. Merchants who follow all verification procedures can easily avoid a chargeback situation. Employees should be trained in the verification procedures set by the card associations, their processor, and their bank. These procedures include verifying cardholder's address, and obtaining the CVV code on the back of the card. These procedures should be followed without exception.

Merchant service account holders and cardholders can work together in reducing the fraud which makes accepting credit cards more expensive for us all. Cardholders are advised to write, "Check ID" instead of your signature in the signature strip on the back of their cards. Should a merchant not ask for your identification remind them, that you have indeed requested that they do so. Merchants should ask for identification from cardholders, if they resist, remind them that you are looking out for them.

Chargeback complaints arising from a dissatisfied customer can be avoided by both the consumer and merchant. The slogan, "Buyer Beware" is the best practice by the consumer. When purchasing items online, consumers should check to make sure that the merchant is using a reputable online gateway Ask questions about the specifics on the merchandise, and the terms and conditions for refunds.

The slogan, "The customer is always right" is the best practice by the merchant. Reputable merchant will have a fairly liberal return policy, as pleasing the customer is usually less expensive than incurring chargeback costs. It is less expensive for the merchant to refund monies to a consumer rather than rack up chargeback fees. Those fees are passed on to the consumer through higher prices.

Credit card companies "urge consumers to treat chargebacks as a solution only as the last resort." They suggest that the consumer make several attempts to resolve the dispute working directly with a merchant, and that the merchant take every reasonable step to satisfy their customer. Simply stated a chargeback is what a consumer does when they feel like they did not receive what they paid for, and the merchant just can't or won't satisfy them.

Merchant Service Reports and News

2009-04-27T15:34:00.001-04:00

Merchant Service Reports empowers the small business owner and card carrying consumers information from merchant service industry professionals. Our team of industry insiders share their knowledge and experience with our readers in order that they might save time and money.

The merchant service industry is growing every day and the mysteries still remain. Those mysteries cause costly confusion for merchants and card holders. Read Merchant Service Reports to make educated and informed choices.

Accept Credit Cards For Small Business - PCI Compliance

2009-03-29T12:07:00.000-04:00

Very soon, all merchants will be required to attain PCI compliance. Payment Card Industry compliance (PCI) compliance) means that a merchant has met the Data Security Standard (DDS). These standards were developed by the brand credit card companies such as Visa, MasterCard, American Express, and Discover among others to strengthen and uniformly define data security measures. These standards are intended to prevent computer hacking, credit card fraud, and many other data security threats. Merchants of all types and sizes must be PCI complaint or risk losing their ability to process credit card payments.

Prior to the creation of joint compliance program PCI DDS, each of the major credit card companies had their own programs. JCB, Discover, Visa, MasterCard, and American Express had similar programs for data security. These security measures for stored, processed and transmitted cardholder data were an added level of security for merchants and their clients. The major card companies formed the Payment Card Industry Security Standards Council (PCI SSC) in 2004, and developed the Payment Card Industry Data Security Standard (PCI DSS).

The standards have been revised since their inception, as a result of the constantly changing credit card payment industry. The technology is constantly improving and those who can commit fraud with it are constantly improving their techniques and the card payment industry recognizes this. The PCI standard was updated in September 2006, to version 1.1 to provide and 1.2 is planned for release in October 2008 with revisions and clarifications of version 1.0. The standards derived from the PCI DSS include PABP and PA-DSS. The PCI SSC also has released supplemental pieces of information including Information Supplement: Requirement 11.3 Penetration Testing, Information Supplement: Requirement 6.6 Code Reviews and Application Firewalls Clarified, and Navigating the PCI SSC - Understanding the Intent of the Requirements. These supplemental works clarify various requirements.

Top credit card processing companies offer assistance to their merchants in attaining and maintaining compliance. Periodically a merchant's compliance is audited by companies who are PCI DSS Qualified Security Assessors (QSAs). Both credit card processing companies and merchants validate their compliance periodically, and compliance is only determined by Qualified Security Assessors who are PCI council approved. Smaller merchants, once they have attained compliance, may perform a self-assessment questionnaire, if in fact, they transact fewer than 80,000 transactions per year.

The PCI compliance is achieved when all the security requirements are met. Those twelve requirements are organized into six groups. Those six groups called "control objectives" logically set out the required steps.

Build and Maintain a Secure Network

Requirement 1: Install and maintain a firewall configuration to protect cardholder data

Requirement 2: Do not use vendor-supplied defaults for system passwords and other security parameters

Protect Cardholder Data

Requirement 3: Protect stored cardholder data

Requirement 4: Encrypt transmission of cardholder data across open, public networks

Maintain a Vulnerability Management Program

Requirement 5: Use and regularly update anti-virus software

Requirement 6: Develop and maintain secure systems and applications

Implement Strong Access Control Measures

Requirement 7: Restrict access to cardholder data by business need-to-know

Requirement 8: Assign a unique ID to each person with computer access

Requirement 9: Restrict physical access to cardholder data

Regularly Monitor and Test Networks

Requirement 10: Track and monitor all access to network resources and cardholder data

Requirement 11: Regularly test security systems and processes

Maintain an Information Security Policy

Requirement 12: Maintain a policy that addresses information security

Two security guidelines provided by PCI DSS to prevent breaches coming in from wireless networks used in any environments containing credit card data as a result of the recognition that wireless LANS and public networks are exposed to security breaches are:

• Firewall segmentation between wireless networks and the point of sale networks or any network that comes in contact with credit card information.

• Use of wireless analyzers (a.k.a. Wireless Intrusion Detection System) to detect any unauthorized wireless devices and attacks

The Payment Card Industry Security Standards Council outlines the PCI DSS Best Practices as follows:

1. Develop an internal policy for the communication between internal and external systems. Use an automated solution to identify consistent configurations.

2. Implement a consistent strategy for end-to-end encryption of all of your ERP communication - including integrated 3rd party solutions.

3. Implement a continuous automated vulnerability management system for your ERP configuration.

4. Develop a strong authentication method to have access to cardholder information on a need-to-know basis. Strong authentication could be done through single sign-on

5. Create multi-factor authentication for management and access to cardholder information. For example, using a smartcard along with username and password.

6. Implement a control process so that auditing is always enabled.

7. Make sure you also have a formal testing process for your control process to management data risk and to lower IT audit costs.

PCI DSS compliance includes ALL merchants and service providers who accept or process credit cards. A single violation of any of the PCI DSS 12 major requirements can result in an overall non-compliant status. Non-compliant incidents can and most likely will result in fines, suspension, and loss of credit card processing privileges. To many small business owners, accepting credit cards is the difference between success and utter failure. To remain competitive in today's cashless society a merchant must accept credit cards.

Don't hesitate; find a top credit card processing company that will offer you in creating and maintaining low cost PCI compliance.

UPDATE

The next revision of the PCI Data Security Standard (DSS) likely will feature clarifications and guidance documents but no major changes, says PCI Security Standards Council (SSC) general manager Bob Russo.

Accept Credit Cards to Survive Tough Economic Times

2009-03-28T09:01:00.001-04:00

by Radhika Basuthakur

Tough economic times means rethinking your business processes to survive the hardships while many of your competitors are closing their doors. In today's fast pace marketplace, this should involve facilities that are convenient for your customers, low cost for your business and technologically up to date to cater for recent consumer trends. A merchant facility is the first step to ensuring that your business is geared for the tough times ahead and will offer you a new dimension to doing business.

Most merchants opt for a merchant account because they want to accept credit cards. This is of course an important payment method in this day and age but a merchant account goes beyond just swiping cards at the checkout counter. Your merchant facility will allow you to accept credit cards and debit cards whether you are mobile business, home based or online business. This allows you to secure payment for you goods immediately, on site or online by accepting a credit card from your customer, irrespective of the time or place of the business transaction.

Although many small businesses feel that the global credit crunch means that less consumers have access to credit cards, this cannot be further from the truth. During these trying economic times, more consumers are using their credit facilities to keep their 'head above water' and compensate for their shortfalls in their income. If you as a business cannot provide a facility to accept credit cards, you are essentially reducing your business potential which is just as good as being inadequately stocked or staffed.

A merchant account is not just a matter of convenience for your customer base. If you can accept credit cards, you can do business anytime of any day with customers from any part of the world. This ensures that you have a sufficiently large and diverse customer base to absorb the impact of tough economic times without having to solely focus on your traditional clientele. Essentially, the ability to accept credit cards through a provider that offers a comprehensive merchant account facility puts you one step ahead of your competitors.

Radhika Basu Thakur is a freelance writer and editor at Corporate SEO Solutions
Article Source: http://ezinearticles.com/?expert=Radhika_Basuthakur

We would like to know..........

2009-02-24T19:17:00.001-05:00

Top credit card processors provide value to their merchants, and address their issues in a timely manner. Small businesses can get caught in a telephone maze thrown up by other and pay exorbitant prices for the priviledge of accepting credit cards. We collect reports of the best and the worst merchant service providers.

Small Business Owners Targeted For Fraud

2009-02-17T23:37:00.001-05:00

Small business owners, who often use their own names and personal accounts for business reasons, are being targeted by ID fraudsters at 1.5 times the rate of all other adults, according to Javelin Strategy and Research's annual Identity Fraud Survey Report. Rising 12 percent to 11 million people over the last year, the number of U.S. ID theft victims increases at the same time the total value of the fraud perpetrated against these individuals increased approximately $54 billion. ID thieves have used phishing scams as well as malware programs to steal victims’ data. Card account fraud has grown and has affected almost 3 percent of the U.S. population. ID theft from utility account hijacking and checking account fraud is increasing at even faster rates.

Merchant Service Reports and News

Online sales tax could be coming to your state

Using PINS is safer; Europeans get it why don't Americans?

Merchants strike back, sue Fed

Banks don't take action to prevent fraud, pass cost to consumers

Data breach notification subject of California law

Skimming: Best tips for small convenience stores and gas stations

Settlement reached between the U.S. Justice Department and MasterCard and Visa

Fed defines "pre-paid cards"

Consumers and small merchants ignored in debit cap fee increase

Settlement sought in antitrust lawsuit against Visa and Mastercard

Financial literacy for kids

MasterCard raises rates and fees

Delay of debit fee caps sought by Senator Tester

Chargebacks harm small businesses

Debit interchange fee caps fought by banking industry

CARD Act Cannot Curb Predatory Credit Card Practices

Prepaid Card Regulation Called For By Senator Menendez

Seeking Information About Gevorg Gorj Kegeyan

Credit and Debit Card Minimum Purchase Requirements Allowed

Small Retail Businesses: Trends To Consider

Consumer Spending Up Due To Luxury Item Sales

Western Commercial Bank Fails

Card-Not-Present Fraud Risks and Mobile Payments

Good News For Small Merchants

Mobile Commerce Fraud

Automated Clearing House Fraud Is On The Rise

Ecommerce Merchant Protections Against Fraud

PCI Compliance For Small Merchants

MSRN: Reader Survey Results Are In

Small Businesses New Targets of Skimming

Let Your Voice Be Heard: FDIC Wants Public Input

Credit Card Surcharges and Restrictions: Who Really Benefits?

Federal Reserve Report: Small Business Owners and Credit Card Use

Data Breaches Due To Ignoring Security Fundamentals

The Rejection of Mobile Commerce

Visa Announces New Security Effort to Ease Burden on Merchants

PCI Compliance May Lead to Unnecessary Expense

Recent Comments and Questions

Fraud Costs Businesses in UK £400K Each

Three Year Extension Granted By PCI Council (PCI/DSS)

New Credit Card Rules Benefit Consumers

Credit Card Payment Fraud Indictments for Bankcard Empire Owner

Goddard Announces Indictment of Bankcard Empire Owner

FBI Advice: Avoiding Credit Card Fraud

U.S. Cost of Data Breach Highest In The World

FTC: Advance-Fee Loan Scams

Voluntary Credit Card Code

Hotels Targeted By Credit Card Hackers

Coming Soon to an On-line Casino Near You?

Masih Madani, ebsg, and Innovative Bank

Kucinich Announces Credit Cards That Don’t Cost You Your Legal Rights

Credit Card Arbitration Against Interests of Ordinary Citizens

Interchange Is About to Change

The Secret is Out: Merchants Take a Stand

Essential Information on Stored Value Cards

Card Fraud Costs $8.6 Billion Per Year

Visa, MasterCard, American Express, Discover

Check the Fine Print on Bank Gift Cards

Masih Madani, FVAB, Innovative Bank

Chargebacks, PCI/DSS Compliance and Credit Card Fraud

FBI Warns That ACH Fraud Is Rising

Seeking information about Masih Madani, HMSBlue, Inadam, Transysa Information Wanted

Sorting Through A Merchant Service Statement: Find Those Hidden Costs

Not All Cards Are Alike

Cyber Attack Incidences on the Rise

Merchant Service Reports and News

Accept Credit Cards For Small Business - PCI Compliance

Accept Credit Cards to Survive Tough Economic Times

We would like to know..........

Small Business Owners Targeted For Fraud