Mastercard’s Business Risk Assessment and Mitigation (BRAM) and Visa’s Global Brand Protection Program (GBPP) were implemented to protect the respective card brands and their consumers from brand-damaging or illegal activity. Payment processors that fail to detect and prevent this activity may be subject to fines leveled by the card brands.
With the quickly evolving landscape of cybercrime and other high-risk activity, payment service providers face challenges in staying abreast of trends that can result in card brand fines. As the expert in the payments and internet ecosystems, LegitScript created a new guide — Top 10 High-risk Trends Everyone in Payments Should be Aware Of to Avoid BRAM & GBPP Fines — that identifies high-risk trends associated with card-not-present transactions that payment providers should know about:
- Get-rich-quick schemes
- Gambling
- Hateful/harmful brands
- Decorative Contact lenses
- Anabolic steroids
- Illicit massages
- Drop-shipping
- Unauthorized aggregation
- DNP
- Apetamin
LegitScript compiled the guide using its merchant monitoring services, which provide best in-class solutions for identifying and flagging high-risk merchants. With the ability to identify and flag risky merchants, payment processors can remove problematic vendors from their portfolios and circumvent the problems (and expensive fines) that may result.
Beyond fines: Other reasons payment processors should be able to identify risky merchants
- Reputational harm. Payment processors should be aware of these high-risk merchants for reasons beyond financial penalties. Some merchants—such as a hate group selling merchandise or requesting donations—may result in reputational harm for the processor.
- Chargebacks. Then there are the issues associated with risky behavior such as drop-shipping, an increasingly common business model that allows merchants to sell products without having a physical inventory. Instead, merchandise is shipped directly from the manufacturer to the customer. Merchants lacking control over their own inventory often face fulfillment and shipping problems, which may result in an increased risk of chargebacks.
- Legal quagmires. Government intervention can occur if merchants are participating in illegal activities, such as selling dangerous controlled substances like bodybuilding steroids, or offering banned services such as illicit adult massage services. Additionally, merchants engaging in high-risk financial activity such as unauthorized aggregation can compromise consumer safety by improperly storing personal information or by allowing fraud on their platforms.
The card-not-present aspect of the payment makes it easy for these high-risk merchants to deceive consumers and payment processors. For example, it may be difficult for a payment processor to spot an organization selling illegal controlled substances, such as steroids and other bodybuilding products, if the merchant is disguising itself as a research lab.
LegitScript’s guide takes a deeper dive into these risks, defining and describing each type of high-risk trend. The guide depicts real-life examples of each risk, and shares additional resources to answer common questions and instructions for how to navigate these trends.
If you’re interested in learning more, LegitScript’s “Top 10 High-risk Trends Everyone in Payments Should be Aware Of to Avoid BRAM & GBPP Fines” can be accessed here.