Trinity Field Services™ - Merchant Site Inspections

Can you trust online mapping verification?

July 30, 2010

Identify Theft vs. Personal Safety

According to a study by UNISYS in March 2009, Americans fear identity theft and fraudulent use of their credit and debit cards more than their own personal safety. Each year, credit and debit card theft continues to increase in the United States. Whether skimming, phishing, dumpster diving or hacking, identity thieves have endless methods for scheming and have escalated in sophistication over time.

In the payment industry, the fraud and risk associated with illegitimate merchant accounts is a never-ending concern. While identify thieves may invent new ways to scam, merchant acquirers must help combat the rise in fraud by establishing risk management standards and entrusting their payment terminals and technology to reliable merchants.

Unfortunately, merchants may not be as trustworthy as they appear on a merchant application, and the potential for collusion between the merchant and ISO is a concern. Discernment between legitimate and fraudulent merchants can be a daunting and time-consuming task for merchant acquirers.

Best Practice

According to MasterCard and Visa, a physical site inspection is the best ethical practice for new merchant accounts in order to weed out fraudulent businesses; however, as is the case with most acquirers, physically inspecting each merchant’s place of operation is impractical due to staff and time constraints.

Without the in-house resources to inspect each applicant, acquirers may use an alternative method of validation. Many companies have begun relying on online mapping and location services to verify new applicants. While this option may seem efficient, using online maps as the only source of verification can be inaccurate and detrimental to a company’s risk management.

Internet Fraud

For example, any internet user can edit or add a destination or business using online maps, complete with company name and address. Additionally, new merchants may also edit data within the online service to make it appear that a legitimate business is in that location. For most acquirers looking to verify a merchant, it is hard to determine whether the company data listed on the online maps is legitimate or user-generated.

Case Study 1:

Online maps may be outdated or incorrect. In the first case study below, a new merchant, La-De-Da Pet Spa cannot be verified using the "current" images from a leading map provider.

Attempting to verify a potential new merchant, La-De-La Pet Spa, who is located at 6607 Colleyville Blvd, Colleyville, TX 75034.

1) A leading online map provider displays the middle of a road, similar to the photo below, when the merchant address is searched.

Site Inspection Case Study

2) After exploring the map for the pet spa, a parking lot is displayed as the approximate address at 6607 Colleyville Blvd.

Site Inspection Case Study

3) If you knew the merchant was located in a one story red brick building, a leading search engine shows an image with a differing business name, Wholesale PC Motherboards, at the merchant’s address. Based on the information online, you would conclude the merchant does not exist and would deny their application. After conducting a physical site inspection, however, La-De-La Pet Spa’s location is verified using the photos displayed below from the inspection. You can safely accept the merchant’s application knowing they are a legitimate business.

Site Inspection Case Study
Site Inspection Case Study

Case Study 2

In the second study, the drive-by images from an online mapping service are too far from the property to verify a new retail merchant, Dots.

Attempting to verify a potential new merchant, Dots, who is located at 2800 Highway 121, Suite 100, Euless, TX 76039.

1) A photo similar to the one below displays when your merchant’s address is searched.

Site Inspection Case Study

2) Once you identify where the merchant’s location may be, a photo similar to below will display. Unfortunately, the image is outdated and shows an empty field for the merchant’s location.

Site Inspection Case Study

3) A physical site inspection quickly verifies the new merchant’s name and location, while saving you time and the frustration of viewing an incomplete online map.

Site Inspection Case Study
Site Inspection Case Study

Best Practice Revisited

A physical site visit could eliminate the risk and financial disaster of providing a nonexistent or fraudulent merchant with reimbursements and payment technology, and aid in avoiding the potential collusion between the merchant and ISO. In addition to saving you time, a physical site inspection corroborates that the merchant business exists and located at the address listed on the application.

Using a third party field inspection company with national coverage, web based technology and dedicated client management to conduct your merchant site inspection will help you stay one step ahead of potential fraud.

Contact us to receive a sample report and learn more about these services. View also our Merchant Site Inspection product page and a complete list of our products and services.

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