Merchant Account Underwriting Tools

“A billion here, a billion there, pretty soon you’re talking about real money.” -Senator Everett Dirksen-

Senator Dirksen wasn’t talking about merchant fraud against processors.

Actually, according to the Dirksen Center, there’s little evidence that he said it at all. Nevertheless, as we see merchant fraud against acquirers grow, we have to think “some real money” is going down the drain.

And the people (read that as groups) who are walking away from targeted efforts against merchant processors and ISO s return again and again. What better way to raise funds for terrorist activities than a crime that involves big numbers, no coordination of the big picture within law enforcement, and rare prosecution?

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“You have to ask what the companies that set up the merchant accounts are doing?” he said. “Who has the responsibility to do due diligence that they are in fact working with who they think they are working with when they open an account?”

But several of the merchant service providers pointed out the difficulty of stopping all fraudulent applications in a world where identities are so easily stolen.

“For all of us, it’s a tough business,” Steinberg, of Merchant E Services, said. “It’s a large, large problem.”

Duhl himself blames the banks where the money was to eventually wind up — wondering how the thieves were able to set up accounts in the post-Patriot Act era. Apparently worried as much about security implications as his personal loss, Duhl contacted the FBI, the Secret Service and the U.S. Postal Inspector’s Office. None of the agents he spoke to returned phone calls placed by

He says he is frustrated that none of the agencies seem to have taken any interest in the incident — particularly because at least one phone call was placed to Pakistan using the cell phone purchased in his company’s name, and one of the bank accounts used to funnel money was established by suspects who presented Russian passports as identification, he says his own research revealed.

“No one in the government seems like they are going to get interested in establishing a case,” Duhl said.

The answer lies in better underwriting, better transaction monitoring, and the reporting of merchant fraud losses to some appropriate federal agency that is willing to look at even the smaller events of $150,000 to $600,000 or so as part of a much bigger picture.

As Senator Dirksen may have indicated, it adds up.

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