The Third Party Payment Processors Association has announced it is backing the Consumer Financial Services Association of America in its lawsuit against the Federal Deposit Insurance Company. The TPPPA recently issued an amicus curae, a brief statement brought to the attention of the U.S. Court, in support of the CFSAA’s lawsuit against federal regulators to end Operation Choke Point. Marsha Jones, President of the TPPPA, declared recently that the TPPPA supports the fraud mitigation in the US payments structure, but it cannot support what it termed as the “choking out” of politically unfavorable businesses.
Operation Choke Point: Government Witch Hunt?
Operation Choke Point was created in 2013 by the US Department of Justice and was intended to “choke out” industries the DOJ and FDIC deemed seedy and/or rife with fraud: short term lending, multi-level marketing, tobacco sales, dating services and debt consolidation, to name a few. It has resulted in more than 10,000 US merchants who have lost access to banks and payment processing capability.
The TPPPA and CFSAA have publicly applauded the actions of the DOJ and FDIC where Operation Choke Point has weeded out fraudulent businesses. However, the TPPPA and CFSAA believe the initiative is taking advantage of legitimate businesses; that it is targeting all industries the government feels are unsavory. In turn, Operation Choke Point proponents contend third party payment processors ignore signs of fraud in order to collect lucrative fees from transactions.
Other Payments Associations Denounce Operation Choke Point
Along with the TPPPA and CFSAA, the Electronic Transactions Association has publically rallied against Operation Choke Point, taking a laissez faire approach. It contends that banks, third party processors and associations such as itself are perfectly capable of identifying and eliminating fraudulent merchants without the Feds help. The ETA even issued its 113-page ETA Guidelines on Merchant and ISO Underwriting and Risk Management as a reference tool.
Merchant Underwriting at Instabill
Instabill merchant account managers and underwriters perform due diligence when boarding new merchants. This includes maintaining a historical database of fraudulent customers; using address verification systems (AVS) checks and customer blocking. To read about the measures Instabill takes to prevent fraud, log on to Instabill.com or chat live with a merchant account manager by selecting the option below.
