High Risk Merchant Account Basics

Retailers selling online should train their employees in high risk merchant account basics. They can and should implement all of the measures they need to prevent fraud, limit customer disputes and protect their website from hacker attacks, however all that does not mean all that much without adequate employee training. To be really effective, the entire personnel should:

• Achieve a complete understanding of the e-commerce fraud risk and data security issues involved in an online transaction.
• Learn the chargeback rules and regulations for web-based transactions.
• Be proficient in their risk management practices and procedures.

Following are the main risk areas present in online transactions:

High Risk Merchant Account Fraud

Following are the main fraud risk possibilities:

• A consumer uses a stolen card or an account number to place a fraudulent order for products or services online.
• Family member uses a card to order products or services on the web, however has not been authorized to do that.
• A consumer fraudulently claims that she did not receive a delivery.

Hackers break into a high risk merchant account's payment processing platform and then issue refunds to the criminals' own card account numbers.

Account Data Theft Risks from a virtual Location

Following are the main account information theft risk possibilities for virtual locations:

• Criminals capture customer payment data during the transmission to or from the merchant.
• Criminals gain access to the high risk merchant account provider's unprotected credit card processing systems and steal the stored account data.

Account Information Theft from a Physical Location

Following are the main account data theft risk possibilities for physical locations:

• Unauthorized person accesses and steals account data stored at the retailer's or its high risk merchant account provider's physical site and then fraudulently uses or sells them for illegal use or identity theft purposes.
• A retailer's or service provider's employee steals account information and then fraudulently uses or sells it.
• Dumpster-truck drivers steal unshredded cardholder information from trash bins at the merchant's or high risk merchant account provider site.

Customer Disputes and Chargebacks

Following are the main customer dispute and chargeback risk possibilities:

• Products or services are not as described on the merchant's website.
• The cardholder is billed prior to the goods or services being shipped or delivered.
• Confusion and disagreement arises between the customer and retailer over return and credit policies.
• The consumer is charged twice for the same sale and / or charged for an incorrect amount.
• The cardholder doesn't recognize the retailer's name on his monthly statement because the merchant uses its high risk merchant account provider to handle the billing.