Human crime — or crime that exploits humans such as fraud, scams, trafficking, etc. — is increasing. U.S. attorneys received 2,198 referrals for human trafficking offenses in 2020, a 62% increase over 2011. Consumers lost approximately $8.8 billion to fraud in 2022, over 30% more than in 2021, and child exploitation increased 35% from 2020 to 2021 alone. These crimes impact people’s lives in different, catastrophic ways, but one thing they have in common is the exchange of money.
As a North American Bancard sales partner, you can educate yourself about human crime, identify suspicious activity, and make a difference in the world.
What can sales partners do about human crime?
One of the first steps you can take to help fight human crime is to do your due diligence and comply with regulations during client onboarding. Carefully collecting data about how a merchant does business and its financial and credit history is critical. However, it’s also important to understand who you are doing business with. Know Your Customer (KYC) and anti-money laundering (AML) laws are designed to eliminate any doubt.
KYC, required by the Financial Industry Regulatory Authority (FINRA) Rule 2090 and Rule 2111, includes three areas.
- Customer identification (CIP) requires identifying information, including the client’s name, date of birth, address, and government ID.
- Customer due diligence includes evaluating the client’s risk profile to check for red flags.
- Enhanced due diligence requires investigating the client’s potential to fund terrorism, launder money, or participate in other illegal activities.
KYC also requires ongoing monitoring, which your payment company partner may automate to stay aware of adverse media, changes in staff, or other indications that your client’s status or business practices have changed.
AML regulations provide you with guidance on how to address illegal activity. Work with your payments partner to learn the steps you should take to minimize risks. Remember, you are uniquely positioned to meet with your clients face to face and learn more about them as you build your relationship. You may notice changes that aren’t reflected in media or databases that your vendor partner connects to with an API. If you suspect that one of your clients is involved in human crime, work with legal counsel to determine next steps that will keep you in compliance with the law and protect your business.
Protect your clients.
You can also play a role in protecting your clients from becoming victims of crime. Merchants are a prime target for fraud. EMV technology protects merchants from some types of fraud, such as using counterfeit or stolen credit cards. However, people with malicious intent find other ways to defraud merchants.
One common scheme is chargeback fraud, or “friendly fraud,” when customers make legitimate purchases with their own credit cards but then use the chargeback process to have their money refunded. Your clients may feel defenseless against this type of fraud, especially when they lack the time and resources to dispute it. Furthermore, if a company’s rate of chargebacks reaches a certain limit, they can be classified as high-risk and pay higher fees for payment processing, which makes the detrimental impact of fraud long-lasting.
Educate your clients about technologies that can help them quickly identify shoppers with a history of high chargeback rates or other suspicious activity, empowering them to make the best decisions for their business.
Keep your eyes open.
Although you undoubtedly turn most of your attention to providing services to your clients, prospecting, and closing deals, stay alert to signs of human crime. Business relationships may look good on paper, but in reality, they may be putting your business and your payment company partner at risk. Additionally, merchants need your guidance and encouragement not to become complacent and unwittingly become targets for fraud. You may be the key to stopping these activities.
If you want to learn more, contact us for information on KYC, AML, and helping your clients fight fraud.
