CHICAGO— The International Anti-Counterfeiting Coalition will launch a portal-based reporting system to help acquirers monitor and get rid of fraudulent online merchants, Robert Caldwell, founding partner of Bellevue, Wash.-based G2 Web Services, told attendees here Oct. 27 during an Electronics Transactions Association leadership summit.
Acquirers incur risk when they fail to do the due diligence needed to be certain what online merchants are selling and how they are processing payments.
But help is on the way through the Washington, D.C.-based International Anti-Counterfeiting Coalition.
The new process was established after intellectual property rights holders, such as companies like Rolex Inc. watches, approached Victoria Espinel, the White House intellectual property enforcement coordinator, seeking help in rooting out online merchants fraudulently selling replica items.
Acquirers face content risks with online merchants in their databases because of their ability to change products without notice, Caldwell said.
“You sign up a merchant who is selling shoes for multiple weeks and then suddenly that merchant is selling (sex-related products),” he said in illustrating how merchants can change directions without acquirers’ knowledge.
The coalition took root after the card brands were approached about helping create a process for better reporting of violations so acquirers could inform merchants of the violations and start taking steps to stop the fraudulent activities, Caldwell said.
Visa Inc., MasterCard Worldwide and PayPal Inc. cooperated with the government officials in Washington, D.C., supporting the new reporting portal for monitoring websites and serving as an aid to acquirers, Caldwell explained.
“This is a big deal for us because before we’ve been able to just say ‘I didn’t know’ when there was a problem,” Caldwell said.
The coalition would provide a centralized recording system to keep track of bogus websites based on complaints from intellectual property rights holders, but acquirers still would be expected to perform their own due diligence to ensure merchants are compliant, he added. The coalition plans to release its first announcements about the new reporting portal soon, Caldwell told attendees.
Addressing another troubling topic, Caldwell said cybercrooks are attacking third-party Web hosts on various payment pages, going after them because they know they can get data from thousands of cards in one place at one time.
Web hosting companies, shopping cart companies or payment gateways can be targets for hackers, and the acquirers would have no way of knowing that card data was not secure with their merchants, Caldwell added.
If the third party is not secure, then hundreds or possibly thousands of the merchants it serves could be in danger, Caldwell said.
Most third-party companies want to be Payments Cards Industry compliant, but do not always know enough about the process, he added.
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