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Table of Contents

Lead Story

Agents of change

News

Industry Update

Private label, public dilemma

Fed insures open loop cards

Reading Black Friday tea leaves

PCI help on the way

Boost online loyalty with new tales

Features

From restaurants to revenue streams

The archetype in the mirror

The archetype in the mirror

The archetype in the mirror

The archetype in the mirror

ISOMetrics:
The spend of Holidays past

Views

Consumers' new mantra: Shop smart

Patti Murphy
The Takoma Group

Embracing PA DSS compliance

Dave Faoro
VeriFone

Gear up now for PCI PED compliance

Biff Matthews
CardWare International

The case for collecting fees

Ken Musante
Humboldt Merchant Services

The case for collecting fees

Ken Musante
Humboldt Merchant Services

Education

Street SmartsSM:
E-commerce essentials

Jason Felts
Advanced Merchant Services

Shifting focus for 2009

Christian Murray
Global eTelecom Inc.

Recruiting top college grads

Curt Hensley
CSH Consulting

A little analysis, significant rewards

Jeff Fortney
Clearent LLC

Looking beyond PCI

Tim Cranny
Panoptic Security Inc.

Preparing risk departments for the holidays

Deana Sellens
Take Charge Business Consulting LLC

10 ways to prevent credit card loss

Gino Kauzlarich
MerchantService.com

Company Profile

On-line Strategies Inc.

New Products

Lift that tradeshow burden

Rotolift
Jelco Inc.

POS in a box

HP rp3000 POS bundle
Hewlett-Packard Co. LP

Inspiration

Ditch the holiday roller coaster

Miscellaneous

POScprit

Departments

Forum

Resource Guide

Datebook

Skyscraper Ad

The Green Sheet Online Edition

December 08, 2008  •  Issue 08:12:01

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Preparing risk departments for the holidays

By Deana Sellens

Editor's Note: This article was originally published in The Acquiring Mind, issue 6, Oct. 29, 2008; reprinted with permission. 2008 Take Charge Business Consulting LLC. All rights reserved.

Every year we hear risk departments are not allowing time off in December because the holidays are the "busy season" for risk. We have even heard people sighting higher fraud losses during the holidays. To date, no one has been able to produce numbers to show any of this to be true.

Time and time again we find this entire line of thinking to be wrong.

It is true there is a transaction spike for retail stores and some mail order business with product, but there are also a ton of businesses with lower or no volumes during the holidays. The actual number of accounts that require investigation is almost unaffected.

January and February are actually the busy times for losses. Unfortunately, many risk staffs are short at this time because processors tell their staff to take vacation in January instead of December. January and February are the months when businesses tend to fail due to lower than expected sales volume during the holidays. Refund volume then overtakes the business, and that's it.

It is critical, especially now, that you train your risk staff to watch for struggling businesses. Running credit reports and reviewing refund policies will be a key part in mitigating risk this year.

A thorough scrub of your portfolio should already be in process. It is important that you define all future service merchants now and begin re-underwriting those with significant volume.

Make sure you release statement messages and mailers to educate your merchants to clearly state refund policies on the credit card receipts. This would be a good year to push "no refunds/exchange only" policies. Inform merchants of the potential problems with no refund policy being in place.

Take time to train your risk team in underwriting. It is amazing how many risk monitoring teams have little or no training in underwriting. This antiquated way of thinking can be fatal to processors and ISOs. Research business credit reporting and test automated solutions to review your portfolio by volume and frequency benchmarks.

Bankruptcy is a serious concern this year, and first quarter 2009 will be a real test for some ISOs and processors.

Are you prepared?

Deana Sellens specializes in operations, risk, compliance and project management consulting. She is a Partner in Take Charge Business Consulting LLC, as well as the current President of the International Association for Financial Crimes Investigators, Gulf Coast Chapter. Deana has a unique customer service oriented attitude toward risk and a proven track record in reducing bankruptcy and fraud losses. Contact her at dsellens@tcbconsultingonline.com.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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