Episode 254
Merchant Fraud DOJ Complaint
Fraudology is presented by Sardine.
A "Chargeback Fraud Protection" Company is Accused of FraudIn today's episode of Fraudology, host Karisse Hendrick dives into the official court filing by the United States District Attorney of Eastern California against a company that claimed to be "the nation's most comprehensive chargeback fraud protection service".
While it's not the first time, it's still rare for a company that promises fraud and/or chargeback prevention to be formally accused of fraud. And the fraud this company is accused of committing is complex and egregious.Relying on her risk experience in the merchant processing world, Karisse explains how payment processors assess risk when reviewing activity on merchant accounts. The rules around what types of companies can and cannot process credit cards, as well as the thresholds set by Visa & MasterCard for chargebacks is exactly what this company set out to game.
With the help of an article written by her friend Frank McKenna (of FrankOnFraud.com), and the recently unsealed court documents, Karisse walks listeners through the elaborate scheme that was responsible for processing over $97 million in questionable and fraudulent transactions. Through transaction laundering and shell corporations, this company managed to stay under the radar of multiple payment processors they were lying to for almost 6 years. Until fraud investigators working for one of the merchant processors they defrauded caught on to their scheme and it started to unravel, getting the attention of the US Department of Justice.Through learning about the ins and outs of this case, you'll learn the overarching premise of fraud prevention in the payment processing space, which is not discussed often on Fraudology or other fraud news sources. This case should also serve as a warning to companies that have taken part in similar practices, as the DOJ has been vocal about wanting to set a precedent for this type of fraud.
Related Links:
Article: The Fraud Protection Company They Say is Just a Sham:
https://frankonfraud.com/fraud-trends/this-fraud-prevention-company-that-was-a-sham/
The Federal Complaint Against the founders of CB Surety, Resellers Consultants, KP testing LLC and others:
https://frankonfraud.com/wp-content/uploads/2023/12/cb_surety_complaint.pdf
Fraudology is hosted by Karisse Hendrick, a fraud fighter with decades of experience advising hundreds of the biggest ecommerce companies in the world on fraud, chargebacks, and other forms of abuse impacting a company's bottom line.
Connect with her on LinkedIn
She brings her experience, expertise, and extensive network of experts to this podcast semi weekly, on Tuesdays and Thursdays.
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