Printer Friendly

VISA TAKES LEAD IN PROTECTING CARDHOLDERS FROM FRAUDULENT TELEMARKETERS

 SAN FRANCISCO, May 5 /PRNewswire/ -- Visa International announced today that its Central Deposit Monitoring (CDM) program to fight international sales slip laundering is currently cracking telemarketing fraud operations at a rate of three per week. Since its launch eight months ago, CDM has enabled Visa to detect and close down more than 60 merchants in more than a dozen countries who were laundering sales slips on behalf of fraudulent telemarketers.
 Visa International estimates that the annual, industry-wide losses attributable to telemarketing fraud exceed $200 million a year in the U.S. alone. So far, CDM was able to prevent more than $25 million in potential cardholder and bank losses.
 "It is virtually impossible for a card-issuing bank to detect fraud schemes involving off-shore sales slip laundering before the losses incurred reach sky-high levels," said William D. Neumann, senior vice president, Risk Management and Security, Visa International. "Only a global organization with a centralized processing infrastructure such as Visa is capable of putting all the pieces together and identifying fraudulent merchants and telemarketers fast enough," he explained.
 In a typical telemarketing fraud scenario, a perpetrator obtains a list of consumers and calls them on the pretext of selling goods or services such as vitamins or travel packages. Often using high-pressure and hard-sell tactics, the fraudster tries to obtain the account number and the expiration date of a general purpose payment card. Once in possession of this information, he is able to produce sales slips.
 The criminal then launders these sales slips through a legitimately signed Visa merchant -- often located in a different country -- who deposits them at his bank. The laundering merchant usually gets a percentage of the total deposit amount for his "services". The cardholders, often unaware of the illegitimate charge on their statements, pay the bill without using their right to dispute it.
 "It's not only our cardholders who get burned. Some merchants act with unbelievable thoughtlessness and become involved in sales slip laundering schemes," Neumann advised. "In order to better protect the millions of people who trust in their Visa cards as a safe means of payment, Visa is prepared to fight this crime with utmost toughness," he pointed out.
 The newest weapon in the Visa arsenal to fight sales slip laundering is Central Deposit Monitoring (CDM). This program monitors and analyzes merchants' daily deposits on a global scale and tracks them for known laundering and telemarketing characteristics. The program is often capable of identifying suspect merchants within the first 24 hours after they begin laundering sales slips.
 Merchants and telemarketers involved in sales slip laundering schemes will be banished permanently from participation in the Visa payment system. And to further protect cardholders and member banks from bogus mail and phone order companies, Visa has established regulatory standards that must be met by new telemarketers in order to qualify for Visa card acceptance.
 In view of the magnitude of telemarketing fraud, Visa and its members have also taken the lead in championing new legislation in several countries to expressly prohibit sales slip laundering and put more stringent penalties in place for telemarketing fraud.
 "Established telemarketers fully support our commitment to fight all fraudulent telemarketing practices," emphasized Neumann. "It is in their best interest if the black sheep in their business are eliminated," he explained.
 Visa is the largest consumer card payment system in the world with more than 10 million acceptance locations, the leading global ATM network, and 304 million cards issued.
 Telemarketing Fraud Case History
 VICTIM OF A SALES SLIP LAUNDERING SCHEME
 Eager to expand on his South England telemarketing business, Mr. S. responded to an advertisement that nearly cost him his business. The advertisement read, "U.S.-based mail order firm seeking offshore associates. High realistic interest. Strong banking relationship a must." It seemed straightforward, but even Mr. S., with more than 20 years of mail order experience, unknowingly walked into a worldwide telemarketing scam.
 The Los Angeles-based mail order firm Mr. S. contacted, told him that they were experiencing substantial losses because Visa and MasterCard placed a $55,000 a day limit on the amount that could be deposited into their account in the United States. They explained to Mr. S. that he would be paid a commission to process the excess sales through his own bank, Lloyds. The company would fax him customers' orders and credit card details daily, and Mr. S. would process them, transferring the money into an account in Los Angeles.
 Even though he requested official company documents, brochures, accounts and bank references, Mr. S. never received them. However, Mr. S. did ask for proof that mail order goods were being sent. The company, being very clever, sent him private courier receipts obtained by sending just a few parcels of cosmetics.
 Becoming suspicious, Mr. S. flew to Los Angeles to see if anything was wrong. While in Los Angeles, he discovered that the address he was given was in a run-down district of the city. Mr. S. should have figured it out then. However, he convinced himself that he must have had the wrong address.
 Returning to Britain, Mr. S. began depositing sales slips on behalf of this Los Angeles-based company. Eventually Lloyds Bank contacted him because they had noticed sudden increases in deposits Mr. S. was making. By this time, Mr. S. had already processed $150,000 worth of transactions and $70,000 of that amount had already been paid into an American bank account.
 Mr. S. explained what had been happening and was told that under the terms of his merchant agreement with Lloyds Bank, he was not permitted to process charges on behalf of a third party.
 Although Mr. S. lost a substantial amount of money, he cooperated fully with Lloyds Bank. Mr. S. warns other retailers not to make his mistake by ever processing someone else's transactions.
 -0- 5/5/93
 /NOTE TO EDITOR: The telemarketing fraud case history, is a typical (and true) case history to illustrate how merchants may get involved in a sales draft laundering scheme./
 /CONTACT: Albert Coscia of Visa U.S.A., 415-570-2039/


CO: Visa International U.S.A. ST: California IN: FIN SU: PDT

LD -- NY012 -- 4728 05/05/93 09:05 EDT
COPYRIGHT 1993 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:May 5, 1993
Words:1032
Previous Article:BIOMEDICAL DYNAMICS' INFUSOR USED ON SPACE SHUTTLE FLIGHT
Next Article:PLAZA HOME MORTGAGE SETS PERFORMANCE RECORDS IN APRIL; SECURES ADDITIONAL $150 MILLION LINE OF CREDIT
Topics:


Related Articles
VISA STRIKES FURTHER AGAINST FRAUD WITH A NEW WORLDWIDE INTEGRATED RISK SYSTEM
FIRST BANK SYSTEM RECOMMENDING PRECAUTIONARY ACTION ON CERTAIN WORLDPERKS VISA GOLD ACCOUNTS TO PREVENT FRAUDULENT USE
Courting fraud.
Providian Launches Nation's First Clear Chip Card.
Visa U.S.A. Launches Online Security PROGRAM ; Alliance With Internet Security Systems and New Payer Authentication Service Bolster Visa's End-to-End...
Brodia Working With Visa U.S.A. to Enable Secure Digital Transactions Utilizing Visa Payer Authentication.
Visa USA Marks November As 'Know Your Check Card Month'; Debit Card Leader Launches Effort to Educate Consumers on The Benefits and Protections of...
Visa USA Launches Breakthrough Anti-Fraud Technology.
Michigan Attorney General Cox Teams Up With Western Union to Fight Telemarketing Fraud.

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters