Be sure to keep an eye out and look for these telltale signs that you may be dealing with a fraudster.
- New customers contact you via text and ask if you accept credit cards
- Emails from domains like outlook.com & fastmail.com
- Being asked to pay a third party by wire transfer or Western Union.
- Poor grammar and spelling mistakes in communications.
- Failed payment attempts by the customer who then asks you to process for them
Merchant Account Holds 101The term merchant account hold refers to a situation where a processing bank freezes the merchant account of a business. When a merchant account hold occurs, a business won’t be able to access its account. Other effects of this situation include funds from open authorizations being held for a potentially extended period of time, an inability to process any new transactions and income not being deposited for weeks or even longer.
Suspected fraud is the most common reason merchant account holds occur. There are situations where an individual opens a merchant account and then carries out some kind of fraud. However, it’s much more common for a legitimate business to experience a hold because the processor is going on the defensive against some other kind of suspected fraud.
5 Reasons Merchant Account Holds OccurExcessive chargebacks are the first reason merchant account holds occur. One of the biggest misconceptions is when a business wins a chargeback case, it’s not counted against them. In reality, processors track the total number of chargebacks a business receives regardless of outcome. And if too many occur, it can result in a hold.
The second reason a hold may happen is a business processes in excess of declared volume and average ticket size. This is information that needs to be declared accurately when signing up with a processor. Third on the list is using an account to accept payment for services or goods that are undisclosed. Directly related to this is the next cause, which is accepting payments for other businesses.
Finally, the last reason a hold may occur is suspicious processing behavior. Of all the potential triggers for a hold, this can be the most ambiguous. A business may simply receive notice and have to figure out the how to deal with a hold from there.
How to Reduce the Likelihood of a HoldWhile the thought of receiving a merchant account hold can be quite scary, the good news is there are steps any business can take to minimize the chances of this happening. The first is to accurately declare volume and average ticket information and update if needed. It’s also important to avoid processing payments for undisclosed services or goods, as well as other businesses.
And since suspicious processing behavior can also trigger a hold, businesses should make sure they fully understand merchant account fraud and the best ways to protect themselves.