Page 10 - GS150702
P. 10
News
Square pays out $2.8 Even then, merchant fraud detection is a delicate matter.
"Unfortunately, merchants who aim to scam consumers
million in chargebacks may pass these tests with flying colors," Eaton-Cardone
said. "Fortunately however, this is where monitoring
chargeback statistics is most valuable."
n June 2015, Creative Creations Omaha owner She advises payment processors to monitor merchants
Patricia Urbanovsky turned herself into local law when suspicious activities occur that could signal
enforcement after being charged with three felony increased risk is just around the corner. Following are
I counts of theft in connection with the sale of worth- several red flags payment processors should not ignore:
less travel vouchers. Investigators revealed that three of • Abnormal increase in chargeback quantities
her former employees accrued $141,000 in personal credit
card charges on behalf of Urbanovsky after she exceeded • Spiked sales activity inconsistent with previous
her own credit card limits to run the voucher scheme. patterns
• Abnormal ticket values that are higher or lower
While Creative Creations itself has operated as a than previous averages
legitimate wedding and event planning and rental
business, Urbanovsky apparently took a wrong turn when • Reduced time-frame between chargeback post
she allegedly created a nonexistent employee at Southwest date and transaction date of claim
Airlines to contract with for reduced airfare vouchers, • Disconnected customer service line or not an-
which were subsequently resold to the public. swering calls during normal business hours
• Failure by merchant to dispute their chargebacks
Starting in March, complaints surfaced that vouchers
purchased through Creative Creations had not been • Heightened number of consumer complaints
funded for redemption. The Better Business Bureau said
it received more than 1,500 public complaints involving Authorities involved in the Creative Creations case
about $1.3 million. continue their investigation of Urbanovsky, who could
face prison time if felony charges brought against her are
A number of consumers also disputed the voucher deemed valid and enforced.
charges when Creative Solutions failed to pay out. San
Francisco-based Square Inc. indicated that it had paid out
approximately $2.8 million in chargebacks as a result of EU disputes MasterCard
disputed voucher charges. Square filed a criminal report
against Urbanovsky, who is known to have opened an cross-border fees
account with Square in October 2014.
Warning signs ignored?
he European Commission initiated anti-trust
Although businesses like Creative Creations may appear proceedings against MasterCard Worldwide.
legitimate on the surface, payment processors must A Statement of Objections (SO) issued July 9,
continuously monitor merchant activities. According to T 2015, highlighted concerns about MasterCard's
Monica Eaton-Cardone, co-founder and Chief Operating cross-border acquiring and inter-regional fee structures
Officer at Chargebacks911, one way to prevent fraud by and their impact on banks, retailers and consumers in the
merchants who engage in consumer scams is to adopt a European Economic Area (EEA).
two-pronged approach.
The EC noted that MasterCard's interchange fees "vary
The first step is to exercise consistent and thorough considerably" among European Union member states,
due diligence when boarding new merchants. "Before a and MasterCard rules restrict retailers from outsourcing
merchant receives a credit card processing account, not acquiring to banks in countries with lower interchange
only should their paperwork be validated, but human rates. The commission asserted that this restriction violates
contact points should also be tested and verified – such anti-trust rules established by the European Union.
as checking the business directory for a matching listing,
calling the customer service phone number to test The EC also views MasterCard's relationships with issuing
competency and using any website contact form to test the banks as a form of cartel in which competitors engage in
response," Eaton-Cardone noted. anti-competitive practices such as price fixing. Article 101
of the Treaty on the Functioning of the European Union
The second step is to monitor the merchant's dispute and Article 53 of the EEA Agreement prohibit this type of
reasons and chargeback trends, since heightened activity.
chargeback activity may signal a problem merchant.
10
Square pays out $2.8 Even then, merchant fraud detection is a delicate matter.
"Unfortunately, merchants who aim to scam consumers
million in chargebacks may pass these tests with flying colors," Eaton-Cardone
said. "Fortunately however, this is where monitoring
chargeback statistics is most valuable."
n June 2015, Creative Creations Omaha owner She advises payment processors to monitor merchants
Patricia Urbanovsky turned herself into local law when suspicious activities occur that could signal
enforcement after being charged with three felony increased risk is just around the corner. Following are
I counts of theft in connection with the sale of worth- several red flags payment processors should not ignore:
less travel vouchers. Investigators revealed that three of • Abnormal increase in chargeback quantities
her former employees accrued $141,000 in personal credit
card charges on behalf of Urbanovsky after she exceeded • Spiked sales activity inconsistent with previous
her own credit card limits to run the voucher scheme. patterns
• Abnormal ticket values that are higher or lower
While Creative Creations itself has operated as a than previous averages
legitimate wedding and event planning and rental
business, Urbanovsky apparently took a wrong turn when • Reduced time-frame between chargeback post
she allegedly created a nonexistent employee at Southwest date and transaction date of claim
Airlines to contract with for reduced airfare vouchers, • Disconnected customer service line or not an-
which were subsequently resold to the public. swering calls during normal business hours
• Failure by merchant to dispute their chargebacks
Starting in March, complaints surfaced that vouchers
purchased through Creative Creations had not been • Heightened number of consumer complaints
funded for redemption. The Better Business Bureau said
it received more than 1,500 public complaints involving Authorities involved in the Creative Creations case
about $1.3 million. continue their investigation of Urbanovsky, who could
face prison time if felony charges brought against her are
A number of consumers also disputed the voucher deemed valid and enforced.
charges when Creative Solutions failed to pay out. San
Francisco-based Square Inc. indicated that it had paid out
approximately $2.8 million in chargebacks as a result of EU disputes MasterCard
disputed voucher charges. Square filed a criminal report
against Urbanovsky, who is known to have opened an cross-border fees
account with Square in October 2014.
Warning signs ignored?
he European Commission initiated anti-trust
Although businesses like Creative Creations may appear proceedings against MasterCard Worldwide.
legitimate on the surface, payment processors must A Statement of Objections (SO) issued July 9,
continuously monitor merchant activities. According to T 2015, highlighted concerns about MasterCard's
Monica Eaton-Cardone, co-founder and Chief Operating cross-border acquiring and inter-regional fee structures
Officer at Chargebacks911, one way to prevent fraud by and their impact on banks, retailers and consumers in the
merchants who engage in consumer scams is to adopt a European Economic Area (EEA).
two-pronged approach.
The EC noted that MasterCard's interchange fees "vary
The first step is to exercise consistent and thorough considerably" among European Union member states,
due diligence when boarding new merchants. "Before a and MasterCard rules restrict retailers from outsourcing
merchant receives a credit card processing account, not acquiring to banks in countries with lower interchange
only should their paperwork be validated, but human rates. The commission asserted that this restriction violates
contact points should also be tested and verified – such anti-trust rules established by the European Union.
as checking the business directory for a matching listing,
calling the customer service phone number to test The EC also views MasterCard's relationships with issuing
competency and using any website contact form to test the banks as a form of cartel in which competitors engage in
response," Eaton-Cardone noted. anti-competitive practices such as price fixing. Article 101
of the Treaty on the Functioning of the European Union
The second step is to monitor the merchant's dispute and Article 53 of the EEA Agreement prohibit this type of
reasons and chargeback trends, since heightened activity.
chargeback activity may signal a problem merchant.
10
