Spot Fraudulent Applications Before It Affects You

November 12th, 2015
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As an ISO, you are the first line of defense in stopping fraudulent applications before submission and potential losses. Where and how the application originated can give you a good idea on whether the submission is fraudulent or legitimate. Here are some red flags to watch for when analyzing your new applications:

  1. Did the application come to your office unsolicited? In other words, did your office make an effort to obtain the merchant account or did it fall into your lap? Merchants are constantly getting phone calls and other correspondences from ISOs trying to get them to switch processors. Hardly ever does a merchant call an ISO to obtain processing. If it comes unsolicited, it is most likely fraudulent.
  2. Did the merchant come from a “referral” or the Internet?  If “referral” is the response that you get, ask the merchant who referred them. The merchant should be able to answer this question automatically. If they cannot give you a quick and concise answer about the referral source, you should begin to question the validity of the potential merchant. Furthermore, if the merchant says that they Googled you or found you on the Internet, it is most likely fraud.
  3. Is the potential merchant outside of your geographical area? If you are a smaller ISO, most likely you sign merchants that are around where you live or office. There are hundreds of card processors in the United States, so it would be unlikely that a merchant located in a totally different geographical region would need to utilize your office for processing when there is most likely another office down the street from them.
  4. Does the application or merchant responses have any or a combination of these red flags?
  • Sole Proprietor
  • High ticket service industry merchant type
  • Free email address provider
  • DBA location in a different state from the signer
  • DBA and signer’s address is very far apart
  • They have never processed, but know they need a “virtual terminal”
  • Need to be set up immediately
  • Do not care about pricing

If any of the above occurs please do not hesitate to notify us before submission. We are not asking you to not sign the deal, but to be aware of the potential for fraud when an application comes from an unsolicited source.

For answers to any questions, please either notify your Relationship Manager or contact the Underwriting Department directly.

To learn more about SignaPay | PayHub solutions –Flexible Pricing, Frictionless Applications, Click-to-Agree, Equipment and Analytics and EMV Liability Shift go to signapay.com or call us at 866.790.3995.

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