Introduction

One of the most common and costly causes of financial loss is merchant fraud; Merchant fraud can pose a significant threat to businesses, leading to financial losses, reputation damage, and legal implications.

Some merchant fraud schemes include:

• Bust out fraud: a merchant account is set up with no intention of being legitimate, and many false transactions are processed before being closed down
• Identity swap: individuals on watch lists or from a sanctioned country use another identity to set up merchant accounts to bypass Anti-Money Laundering (AML) rules
• Transaction laundering (factoring): merchants process unknown transactions for another business
• Business format change: merchants lie about, or change, the nature of the products or services they sell to conceal high-risk activities

Steps to Avoid Merchant Fraud

By carefully screening and verifying potential merchants, we can significantly reduce the risk of fraudulent activities. In this article, we will outline a step-by-step guide to help identify merchant fraud while onboarding.

Step 1: Check SFDC Address

Many fraudsters won’t have a real address to use when signing up so they’ll often provide a residential address which is easier to fake than a commercial one. This is an easy way to catch potential fraudsters and is an early red flag.

Look at the supplied address in SFDC on Google Maps to see if it looks residential or commercial. If it looks residential, then please email [email protected] with their Business Name and SFDC link for further investigation.

Step 2: Collect Customer Information

During the onboarding process, ensure that you gather detailed information about the merchant. Much of this should be done from the AE during the sales process but some will be dependent on you during onboarding. Before a customer goes live, we should make sure their business information in the POS software matches what’s listed in SFDC.

• Business Name
• Physical Address
• Website
• Phone Number
• Administrator in SFDC is the same as the Docusign Signee