Nuvei Case Turns Chargebacks Into FTC Warning Sign
FTC cases expose how merchant approval practices risk fraud and chargebacks
In brief
FTC cases expose how merchant approval practices risk fraud and chargebacks Processors must verify merchant ownership and history to prevent shell companies and fraud Originally reported by Pymnts.
FTC Targets Merchant Approval
Two FTC cases show processors face scrutiny over merchant screening practices
Nuvei's Enhanced Screening
Nuvei requires five months of chargeback data and six months of processing statements for high-risk merchants
Humboldt's Shell Merchants
Humboldt processed payments for shell companies generating chargebacks at 10 times card brands' excessive rates
FTC Settlements
Nuvei pays $4.85 million for consumer redress while Humboldt pays $12 million
Fraud Attempts Rise
57% of payment industry executives report increased fraud attempts over the past year
Verification Becomes Ongoing
67.7% of companies use digital identity verification for account opening and fraud tracking
Early Fraud Detection
81% of companies detecting payment issues before settlement use instant bank account verification
The essence
Processors must verify merchant ownership and history to prevent shell companies and fraud
