The One Key to Averting Operation Choke Point

The One Key to Averting Operation Choke Point

The original plan for this blog post was to list 5 things agents, ISOs and PSPs can do to remain on the good side of the Consumer Finance Protection Bureau and Operation Choke Point. It is no secret the CFPB’s crosshairs are trained on high risk merchants and those companies that provide them credit card processing.

Change of plans.

Instead, we’re offering the Electronic Transactions Association (ETA) Guidelines on Merchant and ISO Underwriting and Risk Management, a free download, written by ETA member ISOs, agents and PSPs that work with high risk merchants. It is the consummate resource – required reading, dare we say – for professionals involved with high risk industries.

High Risk Providers are Being Watched

Arguably the most informative breakout session at the recent Western States Acquirers Association (WSAA) Conference was the one entitled Payments, Compliance and Industry Trends: How Do You Play Your Hand?, moderated by Jason Oxman, CEO of the Electronic Transactions Association. Among the many issues facing the payments industry, the CFPB and Operation Choke Point had everyone’s attention.

Mr. Oxman was very direct about not only the mission of the CFPB, but each of the Federal Government’s watchdogs such as the Federal Trade Commission, Department of Justice and Federal Deposit Insurance Corporation. “What the feds want is to knock out the companies that enable payments for unsavory merchants,” he said.

As a provider of high risk merchant accounts, Instabill is among those companies. Instabill has never wavered in its belief that legal and legitimate businesses deserve the right to process credit card transactions, but the high risk merchant accounts landscape is different now. Big Brother is watching.

The CFPB’s mission is commendable; there are plenty of seedy merchants out there. Through Operation Choke Point, however, there are many friendly dolphins being caught in the shark net.

What Industries Is Operation Choke Point Targeting?

There are a number of business types that the CFPB and Operation Choke Point deems shady. Among them:

  • Adult-Related
  • Collections
  • Guns/Weapons
  • Nutraceuticals
  • Online Pharmaceuticals
  • Pawnbrokers
  • Payday Lenders

What Can PSPs and ISOs Do About Operation Choke Point?

Firstly, download, read and refer to the 109-page ETA Guidelines to Merchant and ISO Underwriting and Risk Management.

If there is a bright side, it is this: The CFPB and Operation Choke Point has given high risk merchant account providers cause to step back and re-examine their methods.

Are we diligent enough in our underwriting? The ETA’s Guidelines provide all the necessary tools to answer that very question.

Have You Felt the Strain?

Operation Choke Point has affected many high risk businesses, PSPs, agents and ISOs over the last two years. Have you or your business been affected? We want to hear your story – please share it with us below.

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One Review on The One Key to Averting Operation Choke Point

    A timely reminder and one we’ve been emphasizing for years. If you are unlucky enough to receive one of those “Civil Investigative Demands” from the CFPB indicating you’re about to be included in their law suit against your merchant, you might want to have your attorney give us a call.

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