s the old saying goes, one bad apple doesn't spoil the whole barrel. Most certainly you're a good apple and all of the merchant accounts for which you submit applications are on the up and up. But, unfortunately, that's not true for everyone.

In the business world, thanks to the creativity of the criminal mind, banks and processors need proof that people are who they say they are before approving merchant account applications. Financial institutions issuing credit have well-founded concerns over financial losses from fraud. This means that many times they require reports and photos to verify the physical location and validity of the business in question.

According to Sandy Doran, President and one of the principals of Property Resource Network, Inc. (PRN), whether site verifications are required can depend on the leniency of a particular bank. She also said that while it's her understanding that all of the card associations require site verifications, Visa and MasterCard go back and forth on their requirements, depending on the type of business or on the number of chargebacks a merchant puts through.

Doran and partners Betty Maccagno and Lauri Waiters have been conducting physical site verifications since they started the company in 1993. Their goal has been to apply their experience in field inspection to provide a reliable resource for merchant site verifications.

According to Doran, PRN is the only inspection company focusing exclusively on the performance of merchant site verifications. PRN is among the country's top 10 field-inspection companies; First Data, Chase, Discover, bankcard processing companies and Merchant Level Salespeople across the United States use its services and depend on the cornerstones of its business model for accurate verifications and fast results.

It's a simple principle Doran describes as "the good ol' Golden Rule: 'Do unto others as you would have them do unto you.' " This holds true for PRN's clients, staff and outside contractors. In a world where PRN is paid to make sure everyone's telling the truth and being honest and reliable, she said her company places the highest value on its integrity and business ethics.

"We have to be cautious with the kind of information we're dealing with. It's very important that we deal with it legitimately," Doran said.

Located in Arroyo Grande, Calif., PRN has a staff of 10 women and a nationwide network of more than 4,000 independent contractors who conduct site verifications for banks, acquirers and street reps.

When it gets a call from a client, PRN sends one of its field reps out to the business in question. The rep visits the location and, through a written report and photographs, verifies the physical address, type of business, inventory, hours, applicable business or state licenses and numbers, signage, structure, work area and inventory.

Doran said the three partners started out working for another company conducting real estate inspections for mortgages, foreclosures and property preservation as well as a small amount of merchant site inspections.

After that company left the area more than 10 years ago, they decided to go out on their own. "We contacted the ETA when it was still the BSA, joined the association and made contacts," Doran said.

They've been members - and exhibitors - ever since. In fact, attending the recent ETA in Las Vegas was part of their 10th anniversary celebration. "We had a blast!" she said.

PRN conducts site verifications for new accounts and established accounts where changes in address, processing volume or increasing chargebacks start occurring. With new accounts, Doran said a lot of street reps are doing their own physical visits, but it depends on how they're generating clients.

"Some use telemarketing or the Web. There are also chains or medical offices with multiple locations," she said. "Site verifications should be used as a tool as part of the process. You have to report what you see. We ask our field reps to use their intuition, rely on their experience and give opinions, but it's not up to us to say whether there's an elaborate scheme going on."

Doran mentioned one instance where PRN did a verification and found out later that the supposed massage business was laundering money. The client was advised that there was not enough data to determine legitimacy.

To keep things positive, PRN prefers that its field reps set appointments with merchants, calling them first to let them know they will be visiting. This is especially important with home-based businesses.

"We would prefer that the sales agents let their merchants know a site verification is necessary, but sometimes that doesn't happen," Doran said. "A lot of people just aren't comfortable letting us into their homes. But we still have to verify Web or MO/TO businesses that are run out of houses that process transactions. We verify the physical location, but if there is no inventory to photograph, we'll include shots of the office area or a screen capture of the Web site in the report."

A big part of PRN's success has resulted from the relationships the partners have with each other as well as with their staff, field reps and clients. Establishing and maintaining strong relationships with everyone involved in the business is one of the most important factors they work on.

"When we first set up our partnership, we did it with the advice of an attorney," Doran said. "We keep patting ourselves on the backs because of the success of the business and that we've managed to stay good friends. We have a lot of respect for each person's contributions.

"We encourage our staff to participate in developing and improving PRN services and offer opportunities for them to achieve their educational goals. Each position is exposed to cross training in order to better understand the overall process. We appreciate our employees, pay them well and offer full benefits. It's more cost effective to retain rather train new ones.

"We view the reps out in the field as our co-workers; each staff member is assigned a group of independent contractors to work with. We understand that inspections are work and I like them to meet a two- to five-day deadline, so we pay them well and pay them quickly."

There are guidelines PRN has developed for the field reps to follow, available on the Web site. Doran said PRN has independent contractors in all 50 states.

When the report is complete, the field rep e-mails or faxes it back to PRN, which usually forwards it on to the client either in batches, depending on the size of the client and number of verifications, or individually.

A slight twist on whom PRN is inspecting is also a sign of the times, Doran said: "More and more often these days, along with the merchant information, we're also verifying for the processor that the MLS is who he says he is - where he's living and working."

Future plans for PRN include developing its electronic capabilities. Doran said the Web site is strictly Waiters' area of expertise and that their goal is to be able to receive orders from clients, send them out to field reps and then make the information accessible to clients, all electronically.

"We want to adapt and grow with the future of this industry," Doran said. "We hope to serve as a valuable weapon against potential fraud."