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Insights and Expertise

Practice KYC millions of other records, has been compromised.

How well do we know our merchants? Fraudsters are In the current threat environment, experts have noted
forcing us to create our own step-up challenges by that advanced forms of authentication can significantly
second-guessing every merchant application. We educate reduce fraud without inconveniencing customers. After so
merchants all the time about KYC but in the current threat many years of helping merchants harden security without
environment, MLSs must practice our own KYC. causing customer friction, it's time for MLSs to take a page
from our own playbook. Let's look for ways to weed out
Technology can help these efforts, but the best approach is bad guys without disturbing all the great new merchants
combining artificial intelligence, biometrics and advanced who are signing up for our services.
authentication methods with human oversight. Here are
some recommended ways to tell the good guys from the While advanced technologies can help detect deep fakes,
bad guys. there is no substitute for rolling up our sleeves and

• Authenticate business owners: Call the people who performing good old-fashioned due diligence. Take the
have filled out forms on your website and confirm time to scrutinize each application that crosses your desk
and stay alert to red flags. These simple actions will help
their identities. A merchant who doesn't answer the
phone or uses text-to-voice is a major red flag. us keep fraudsters at bay and our companies and partners
in the black.
• Perform virtual site inspections: Search for a busi-
ness address online to confirm a location. Want to know more? Keep reading The Green Sheet and
consider following me on LinkedIn, where we can share
• Scrutinize uploaded documents: Study all docu- ideas and support each other, at https://www.linkedin.com/
ments, checks and drivers licenses, even if they look in/allenkopelman/.
legitimate. Allen Kopelman, a serial entrepreneur, is co-founder and CEO of
• Verify business activity: Look up a business owner's Nationwide Payment Systems Inc. and host of B2B Vault: The Payment
social media, Facebook and LinkedIn profiles to see Technology podcast. Email him at allen@npsbank.com nd connect on
if they are active, and obtain corporate papers to see LinkedIn https://www.linkedin.com/in/allenkopelman/ and Twitter @
where their business was incorporated. Scammers AllenKopelman.
are flocking to Wyoming, Delaware, Nevada and sev-
eral other states that do not show who owns the cor-
poration. Banks and processors must vet merchants
that are incorporated in these locations to prevent
risk of fraud.
Befriend risk, underwriting

Remember, risk managers and underwriters have access
to tools and advanced technologies, but do them a favor
by vetting your applications. Don't risk your reputation
and credibility by sending in trash. If you become known
as someone who passes bad paper, these analysts will put
every one of your deals under a microscope, and your
overall approval ratings will plummet.It's also not a bad
idea to tell them when you get an application from the web
and are not sure if it is legitimate. They will appreciate
your honesty and transparency and not hold it against
you.

Another way to stay in the good graces of the people
who approve or decline your applications is to collect
all necessary documents upfront before submitting
paperwork. They may occasionally ask for additional
documentation, but you need to cover all the bases to
avoid having your application land in pended status.
Stay vigilant

Fraud is running rampant in our society. No one reacts
anymore to news of the latest security breach or when a
legitimate-looking deal is exposed as a fraud. We've seen
it all before and know that our personal data, along with

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