We could be wrong, but once in a while we’ll get a merchant account application from an e-commerce merchant, whose website raises red flags. We’re forced to play judge and jury on whether we go forward in the merchant boarding process or decide it is a fraudulent website.
Within the last six months, one particular merchant approached us for a merchant account for his business. Let’s just say this person was selling school supplies online, and there were several elements to his website we thought were cause for concern.
The One Reason E-Commerce Fraud is Rampant
You’ve probably received a new credit card within the last 18 months, one containing the microchip. While the chip-enabled credit card is making payments safer in the U.S., a byproduct is e-commerce fraud or card-not-present (CNP) fraud.
More than ever, we need to be on guard.
Why We Balked at This Website
To a consumer, the merchant’s website looked legitimate. We found a number of red flags, however, things the average consumer would certainly overlook.
- Pricing that defies common sense: What the merchant was selling could be bought in any retail store – a CVS, Marshall’s or Target – on the cheap. There were backpacks: The drawstring kind that one can get for free from the local bank or realtor, priced at nearly $125; and the padded shoulder strap kind at nearly $200. One backpack was more than $200 and depicted a children’s movie from 2010. Another, more recent movie-themed drawstring backpack was priced at $29. This was strike one.
- Website design and quality: The merchant’s website was clean and assembled very simply. It had a contact page with a built-in form; a terms and conditions page and a help center – all things we recommend merchants have on their websites. It appeared legitimate. It got us thinking: If this merchant is truly selling school supplies, why the need for a high risk merchant account provider?
- No Social Icons: Not that it’s a dealbreaker, but an e-commerce website without Twitter, Facebook, Pinterest or Instagram links brings into question whether the merchant is fully utilizing best practices for maximum exposure and sales.
- Live chat not activated: On the merchant’s contact page, there is a link within the text for live chat. When clicked, however, it is inactive.
We Confronted the Merchant
Before we could go forward, one of our merchant account managers explained to the merchant that the pricing was inconsistent, that the items were too expensive and could be purchased at a fraction of the cost virtually at any retailer – e-commerce or brick-and-mortar.
We explained that any acquiring bank would question this, but the merchant stood firm. We went with intuition and opted to pass on his request for a merchant account.
What Do You Need to Get a Merchant Account?
As a high risk payment processor, Instabill account managers and underwriters perform due diligence on each application they receive.
Curious to know what materials you need to get a merchant account? View our merchant account checklist and give us a call at 1-800-318-2713.