Adult Content Merchant Tough New Regulations effective 04/15/02 - GoFuckYourself.com

Maximus · 02-07-2002, 12:13 PM

Effective April 15th 2002, MasterCard will implement and enforce revised rules for the Merchant Registration Program. This program will effect the following Merchant types:

Key- Entered telecom mechants
Electronic Commerce Adult content (videotext) merchants
Excessive chargeback special Merchants

Key-entry telecom merchants and Electronic commerce adult merchants will now need to be registerd with MasterCard. If a merchant has been deemed an excessive chargeback merchant, the account will also need to be registered with MasterCard.

Merchants under these categories that are not registered are subject to non-compliance fines that range from 5,000 to 25,000. If a merchant is not registered, and falls under one of these types and has fraud in excess of 25,000 the Acquirer is subject to fines that range from 25,000 to 150,000.

The registration fee is 1000.00 for all Electronic Commerce Adult Content (video text) merchants that have been identified under the excessive chargeback programs. Currnetly there is no fee for key entry telecom merchants but they must still be registered with MasterCard.

Acquirer obligation:

Every three months, effectiveone calander month from merchant registration, the acquirer must submit to MasterCard via MasterCard Alerts a report of Sales, Chargebacks and Credit activity broken down by calendar month for each of its merchants.

MasterCard must also be notified if a merchant has exceeded the excessive chargeback merchant threshholds by the 15th of the month after the two consecutive months in which the ratio has exceeded the extablished threshold.

Key Entry telecom Merchants: Chargebacks to interchange sales volume exceeding 2.5%

Electronic commerce adult content (video text) merchants: Chargebacks to interchange sales volume ratio that exceeds 1% (count) or 2.5% ( dollar amount)

Due to the severity of this program it is imperative that merchants that operate under one of theses types must be compliant by april, 2002 and remain compliant with MasterCard rules.

End
**********

SNOW · 02-07-2002, 12:22 PM

Thank you for the post.....

Maximus · 02-07-2002, 12:44 PM

In my opinion, the credit card companies have greatly contributed to the chargeback problem by allowing every j doe to chargeback a legitimate sale, no matter how much we can prove they did it. Chargeback numbers then increase, on the surface giving validity to their actions. This is where the industry is headed. Its getting increasingly difficult to do business online as a videotext merchant. You may want to contact your bank or third party processor to find out how this may effect your company

SykkBoy · 02-07-2002, 01:01 PM

Quote:

Originally posted by Maximus

Unfortunately, in my opinion, the credit card companies have created the chargeback problem by allowing every j doe to chargeback a legitimate sale, no matter how much we can prove they did it. Chargeback numbers then increase, on the surface giving validity to their actions.

yeah, but we should also put a little blame on the cockknockers who double bill people's credit cards and do that cross billing bullshit. All the litle tricks from these sites to get that extra 30-40 out of every surfer doesn't exactly help either. With chargebacks, how many are legit?

Before we had the massive fuck up on our sites, we had a total of only 4 chargebacks in a one year period. Why? Because we didn't do any tricky billing. When a customer wanted a refund, they got it. There were no games played with our customers. A few got peeved at our exit consoles, but that's it.

The whole "your credit card will not be charged" bullshit didn't exactly make Visa and Mastercard want to embrace us.

So, while there is a lot of bullshit with chargebacks, we also have to take a look at ourselves and ask how much we are to blame as well....

Maximus · 02-07-2002, 01:17 PM

Yes i agree with the fact that "posting" which is what your referring to is a chargeback waiting to happen. Buy here free and offer three more frees before you can make it to the original members section.

The major problem is that The credit card companies dont take the fact that folks really did the transaction into consideration when a dispute arises. If the consumer calls the bank you have no idea a chargeback is coming until it does.

Secondly the card companies dont take into consideration a loss of sales. So if your sales go down , like after sept 11, you can be fined because thresholds were broken

Plugger · 02-08-2002, 12:32 AM

Do you really think the the CC companies are really that concerned about chargebacks? This goes a little bit deeper than that!

Here it is in a nutshell:

For years the CC companies have been pressuring the Fed Gov for more stringent Bankruptcy laws. On world wide standards it is fairly easy to erase your CC debt by filing bankruptcy in the US.

The CC companies were getting nowhere.

Then all of a sudden the CC companies start craking down on porn. Wow, then congress passes more stringent bankruptcy laws, just what the CC companies wanted.

It is a simple exchange, Quid Pro Quo.

The CC companies know that it will be hard for the Gov't to combat on line porn, but the "people" would support it. But if they, themerchant banks, can kill the billing companies then on line porn is gone. So they make a deal with the Gov't. They, the merchant bankers kill on line porn by cutting off their money supply (via unfair ratios that do not apply to other industries), and the Gov't gives them the bankruptcy laws they want. The bankruptcy laws the merchant banks got are more valuable to them than on line porn.

There is no doubt that the people that fucked people with bogus rebills did not help the situation, but in the overall picture there is a lot more going on.

kane · 02-08-2002, 01:07 AM

it's all a big game the credit card companies play. You have too many chargebacks then they fine you. So basically they are taking money from you for the chargebacks ( some I'm sure are legit ) and then when they have taken too much from you they fine you for it. It's like if you don't have money to pay your bill they give you a late charge as if somehow if you didn't have $100 to pay them now that they fined you you will have $125

But I think this will mostly effect the shady sites. I went inside one site that sucked, looked for a way to cancel a membership and never found it. I emailed the support and 36 hours later got a reply that told me I had to contact the credit card people which took 48 hours to do so I was then over my 3 day trial and was billed an entire month. When I read their terms closely they stated that I had to cancel at least 24 hours before the trial ended not to be charged. . . so basically unless I canceled before I even joined there was no way to avoid getting a full months billing.

It's guys like that that are causing the problems.

NETbilling · 02-08-2002, 10:48 AM

Hello,

I could not agree more with almost all said above. Good discussion.
Webmasters need to continue to clean up the sites and be fair to the customers without any deceptive billing practices. This coupled with good customer service and membership areas that provide what the site tours stated will surely help decrease chargeback ratios.

The ratios set by the card associations are unreasonable but we must play by their rules to stay in the game.

Mitch

Thumbelina · 02-08-2002, 11:03 AM

I know that this seems hoackey, is there a webmasters association and if there isn't why not.?
We all want to prosper, and as the story goes one rotten apple will spoil the barrel.

No to sound like an eliteist, if you say you belong to it you know that you won't get fucked around as a cutomer.
Setting guild lines, almost making a governing body.
Isn't this one of the complaints and the stigmas attached to our industry, no real self governing body?

Just posing the Q. If I am missinformed please tell me.

Maximus · 02-08-2002, 11:11 AM

Great view points on this.

As far as proper members sections and customer service I couldnt aggree more. The higher quality sites with good customer sevice the better. In our case, as a third party rebiller, all recurring membership sales are clearly disclosed as recurring at the sale page. All customers get a receipt in their email with easy one touch cancellations and a reminder of rebilling. How many actually give their correct email?? not all of them, thats another problem.

We do have most of clients under the threshhold but they have to trade sales to do it. Its a constant balancing act because webmasters main concern is usually conversions. How many sales were approved vs declined.

New regulations will require disclosure to MC/Visa of all site owners and history....
Keep me out of trouble and in business should be every webmasters main concern.. especialy if they have been turned down by the bank already or are on the TMF list. Under the radar is the best way to fly.

TheFLY · 02-08-2002, 12:03 PM

I wouldn't doubt what plugger is saying... although it may be a little more complicated than that even...

Either way, it's a form of indentured servitude... basically to have a paysite you sign a contract which allows them to hold you by your balls -- and they can squeeze you dry whenever they feel like it...

If I was a cc company and I wanted some extra $$$ -- I'd just pay some friends to dial up porn site XYZ -- then cancel membership -- then fine adult website XYZ HUGE $$$...

Who regulates fraud within the cc industry? Do they regulate themselves? They have to much power.

Kimmykim · 02-08-2002, 12:10 PM

Sorry, plugger, that story is right up there with some other urban legends.

Not saying that the gov't doesn't and won't look for any avenue they can to try and control adult content, but in reality the easiest way for the gov't to regulate it would be thru the FCC, go after the satellite companies, the cable companies, the hotel chains, since these guys are by far and away the leading distributors of porn. The internet's really still just a drop in the bucket compared to these distribution channels.

The FTC keeps a close watch on companies that bill on the borderline of deceptivity, since they get tons of consumer complaints every day about it.

Best thing you can do as a site owner is to make sure your disclosure is clear, correct, and prominent on your site. Yes, it may cost you a signup or two now, but that's better than the legal defense costs if you get nailed.

Maximus · 02-08-2002, 12:30 PM

Quote:

Originally posted by Thumbelina
I know that this seems hockey, is there a webmasters association and if there isn't why not.?

YES thumbelina... glad you asked. WSB has just formed a coalition and we are gong to be recruiting webmasters and third party aggregators. The top 4 aggregaters alone control about 1 billion in adult processing a year.

We plan to have a collective voice to be heard and recognized. Also this will give national exposure if we ever collectively decide to temp suspend transactions for a certain card. That could get big exposure.. there are many issues we need to address.

I.M.A.
Internet Merchants Association

Our attorneys are processing the trademark and we will be full steam ahead soon. what do you think

TheFLY · 02-08-2002, 12:36 PM

Cool...

Snake Doctor · 02-08-2002, 02:21 PM

I have to side with Sykkboy on this one.
As is very common, most webmasters only see Visa rules and regulations through the goggles of "how it affects my bottom line today" without seeing the big picture.

There are ALOT of companies out there using deceptive billing practices, making it near impossible for members to cancel, selling them memberships to other paysites while giving the illusion that they are simply completing the first transaction etc etc.

Visa and MC know the potential revenue from E-commerce is HUGE for them, and they want to remain the preferred method of payment for ecommerce products and services.
In order to do this they have to make Joe Surfer feel "SAFE" when using their CC to make purchases online.
Yes there are several people out there who abuse the system and make frivolous chargebacks, but if I'm not mistaken the new rules require the credit card holder to cancel their card and wait to receive a new one when making what KK calls a "duh" chargeback.

If Joe Surfer DOES NOT feel safe using their credit card online because a company with deceptive billing practices can overcharge them and the customer has no recourse, then they will stop using their CC's online.
If THAT happens it will cost all of us a fuck of a lot more money than any of us will ever have to pay in chargeback fines.

Just my

NETbilling · 02-08-2002, 09:27 PM

Maximum,

So since we are not an "aggregator", does that mean you are not interested in having our involvement or backing in I.M.A. ?

Mitch

Plugger · 02-08-2002, 10:21 PM

Quote:

Originally posted by Kimmykim
Sorry, plugger, that story is right up there with some other urban legends.

Kimmykim,

I guess you missed my point. What do the cable companies, hotel chains, etc have to offer the Gov't and what would they want in exchange? The Merchant Banks VERY much wanted stiffer Bankruptcy laws and for years they never got them. Then, boom, the internet takes off on the .com craze and, whether or not interenet porn is big, the perception is that it is huge and out of control. Now the Merchant banks have something to offer the Gov't. They kill the billing and the Internet porn dies and the Gov't does not have to do anything.

BTW, porn on cable, hotels, etc is all softcore. I don't think I ever saw a gapping cum filled asshole at a Hilton, or on Spice. The porn on those distribution outlets does not have the perception of being out of control, thus is not a main focus.

Also, on those other distribution channels they would simply go after the producers, and guess what they are. Seymore Butts, Max Hardcore, JM Productions, are all in court right now.

The Gov't will use all avenues to go after porn and it will go after it where the public perceives it as the most threatening. The internet is perceived as out of control.

Since internet porn relies on Credit Cards for probably 99.9999% of its business (I am not sure how much dialers and mail in check account for) it seems like a logical tactic to kill the money source.

If I where the Gov't that is what I would do. That and prosecute Title 18 sec. 2257. That would pretty much bring it under control.

Maximus · 02-09-2002, 11:17 AM

Mitch,

We would love your companies experience and involvement in this association. Netbilling is an excellent company and we would very much include you.

Ill let you in on a little secret. When we started in 1996 our original company was called Internet Investments... We worked with a company called Credit Card Network to do our processing, Mark Munchnick was our guy. I beleive CCN was the predesecor to Netbilling or possibly merged, am I right?

View Poll Results: Is it fair?
Ever been fined by MC/Visa	1	8.33%
Is Visa/MC fine structure excessive	1	8.33%
Should banks be allowed to auto chargeback disputes	0	0%
Would you join a coaltion of online merchants	0	0%
Do you sleep with your socks on	10	83.33%
Voters: 12. You may not vote on this poll

02-07-2002, 12:13 PM	#1
Maximus Registered User Join Date: Jan 2002 Posts: 81	Adult Content Merchant Tough New Regulations effective 04/15/02 Effective April 15th 2002, MasterCard will implement and enforce revised rules for the Merchant Registration Program. This program will effect the following Merchant types: Key- Entered telecom mechants Electronic Commerce Adult content (videotext) merchants Excessive chargeback special Merchants Key-entry telecom merchants and Electronic commerce adult merchants will now need to be registerd with MasterCard. If a merchant has been deemed an excessive chargeback merchant, the account will also need to be registered with MasterCard. Merchants under these categories that are not registered are subject to non-compliance fines that range from 5,000 to 25,000. If a merchant is not registered, and falls under one of these types and has fraud in excess of 25,000 the Acquirer is subject to fines that range from 25,000 to 150,000. The registration fee is 1000.00 for all Electronic Commerce Adult Content (video text) merchants that have been identified under the excessive chargeback programs. Currnetly there is no fee for key entry telecom merchants but they must still be registered with MasterCard. Acquirer obligation: Every three months, effectiveone calander month from merchant registration, the acquirer must submit to MasterCard via MasterCard Alerts a report of Sales, Chargebacks and Credit activity broken down by calendar month for each of its merchants. MasterCard must also be notified if a merchant has exceeded the excessive chargeback merchant threshholds by the 15th of the month after the two consecutive months in which the ratio has exceeded the extablished threshold. Key Entry telecom Merchants: Chargebacks to interchange sales volume exceeding 2.5% Electronic commerce adult content (video text) merchants: Chargebacks to interchange sales volume ratio that exceeds 1% (count) or 2.5% ( dollar amount) Due to the severity of this program it is imperative that merchants that operate under one of theses types must be compliant by april, 2002 and remain compliant with MasterCard rules. End ********** __________________ Maximus Websitebilling Last edited by Maximus; 02-07-2002 at 12:43 PM..

02-07-2002, 12:44 PM	#3
Maximus Registered User Join Date: Jan 2002 Posts: 81	In my opinion, the credit card companies have greatly contributed to the chargeback problem by allowing every j doe to chargeback a legitimate sale, no matter how much we can prove they did it. Chargeback numbers then increase, on the surface giving validity to their actions. This is where the industry is headed. Its getting increasingly difficult to do business online as a videotext merchant. You may want to contact your bank or third party processor to find out how this may effect your company __________________ Maximus Websitebilling Last edited by Maximus; 02-07-2002 at 01:22 PM..

02-07-2002, 01:17 PM	#5
Maximus Registered User Join Date: Jan 2002 Posts: 81	Yes i agree with the fact that "posting" which is what your referring to is a chargeback waiting to happen. Buy here free and offer three more frees before you can make it to the original members section. The major problem is that The credit card companies dont take the fact that folks really did the transaction into consideration when a dispute arises. If the consumer calls the bank you have no idea a chargeback is coming until it does. Secondly the card companies dont take into consideration a loss of sales. So if your sales go down , like after sept 11, you can be fined because thresholds were broken __________________ Maximus Websitebilling

02-08-2002, 10:48 AM	#8
NETbilling Confirmed User Industry Role: Join Date: Jan 2002 Location: Huntington Beach, CA Posts: 8,584	Hello, I could not agree more with almost all said above. Good discussion. Webmasters need to continue to clean up the sites and be fair to the customers without any deceptive billing practices. This coupled with good customer service and membership areas that provide what the site tours stated will surely help decrease chargeback ratios. The ratios set by the card associations are unreasonable but we must play by their rules to stay in the game. Mitch __________________ Mitch Farber CEO - NETbilling, Inc. Email / Phone: 888-357-8166 / 661-252-2456 Transaction processing & 24/7 call center services with exceptional rates and flexibility, since 1998! Last edited by NETbilling; 02-08-2002 at 10:52 AM..

02-07-2002, 12:22 PM	#2
SNOW Confirmed User Industry Role: Join Date: Feb 2001 Posts: 3,963	Thank you for the post.....

02-08-2002, 12:32 AM	#6
Plugger Confirmed User Industry Role: Join Date: Jul 2001 Location: North Coast Posts: 592	Do you really think the the CC companies are really that concerned about chargebacks? This goes a little bit deeper than that! Here it is in a nutshell: For years the CC companies have been pressuring the Fed Gov for more stringent Bankruptcy laws. On world wide standards it is fairly easy to erase your CC debt by filing bankruptcy in the US. The CC companies were getting nowhere. Then all of a sudden the CC companies start craking down on porn. Wow, then congress passes more stringent bankruptcy laws, just what the CC companies wanted. It is a simple exchange, Quid Pro Quo. The CC companies know that it will be hard for the Gov't to combat on line porn, but the "people" would support it. But if they, themerchant banks, can kill the billing companies then on line porn is gone. So they make a deal with the Gov't. They, the merchant bankers kill on line porn by cutting off their money supply (via unfair ratios that do not apply to other industries), and the Gov't gives them the bankruptcy laws they want. The bankruptcy laws the merchant banks got are more valuable to them than on line porn. There is no doubt that the people that fucked people with bogus rebills did not help the situation, but in the overall picture there is a lot more going on.

02-08-2002, 01:07 AM	#7
kane Too lazy to set a custom title Join Date: Aug 2001 Location: portland, OR Posts: 20,684	it's all a big game the credit card companies play. You have too many chargebacks then they fine you. So basically they are taking money from you for the chargebacks ( some I'm sure are legit ) and then when they have taken too much from you they fine you for it. It's like if you don't have money to pay your bill they give you a late charge as if somehow if you didn't have $100 to pay them now that they fined you you will have $125 But I think this will mostly effect the shady sites. I went inside one site that sucked, looked for a way to cancel a membership and never found it. I emailed the support and 36 hours later got a reply that told me I had to contact the credit card people which took 48 hours to do so I was then over my 3 day trial and was billed an entire month. When I read their terms closely they stated that I had to cancel at least 24 hours before the trial ended not to be charged. . . so basically unless I canceled before I even joined there was no way to avoid getting a full months billing. It's guys like that that are causing the problems.

02-08-2002, 11:03 AM	#9
Thumbelina Confirmed User Join Date: Jan 2002 Location: Canada Posts: 675	I know that this seems hoackey, is there a webmasters association and if there isn't why not.? We all want to prosper, and as the story goes one rotten apple will spoil the barrel. No to sound like an eliteist, if you say you belong to it you know that you won't get fucked around as a cutomer. Setting guild lines, almost making a governing body. Isn't this one of the complaints and the stigmas attached to our industry, no real self governing body? Just posing the Q. If I am missinformed please tell me. __________________ <a href="http://www.bimbolinks.com"><img src="http://www.12circle.com/banners/bimbo_120x60.jpg"border="0"></a><BR> Last edited by Thumbelina; 02-08-2002 at 11:15 AM..

02-08-2002, 11:11 AM	#10
Maximus Registered User Join Date: Jan 2002 Posts: 81	Great view points on this. As far as proper members sections and customer service I couldnt aggree more. The higher quality sites with good customer sevice the better. In our case, as a third party rebiller, all recurring membership sales are clearly disclosed as recurring at the sale page. All customers get a receipt in their email with easy one touch cancellations and a reminder of rebilling. How many actually give their correct email?? not all of them, thats another problem. We do have most of clients under the threshhold but they have to trade sales to do it. Its a constant balancing act because webmasters main concern is usually conversions. How many sales were approved vs declined. New regulations will require disclosure to MC/Visa of all site owners and history.... Keep me out of trouble and in business should be every webmasters main concern.. especialy if they have been turned down by the bank already or are on the TMF list. Under the radar is the best way to fly. __________________ Maximus Websitebilling

02-08-2002, 12:03 PM	#11
TheFLY So Fucking Banned Join Date: Jan 2001 Location: http://www.thefly.net/ --- Quit your job and live off steady traffic. Posts: 11,856	I wouldn't doubt what plugger is saying... although it may be a little more complicated than that even... Either way, it's a form of indentured servitude... basically to have a paysite you sign a contract which allows them to hold you by your balls -- and they can squeeze you dry whenever they feel like it... If I was a cc company and I wanted some extra $$$ -- I'd just pay some friends to dial up porn site XYZ -- then cancel membership -- then fine adult website XYZ HUGE $$$... Who regulates fraud within the cc industry? Do they regulate themselves? They have to much power.

02-08-2002, 12:10 PM	#12
Kimmykim bitchslapping zebras!!!!! Industry Role: Join Date: Jun 2001 Location: In a shack by the beach Posts: 16,015	Sorry, plugger, that story is right up there with some other urban legends. Not saying that the gov't doesn't and won't look for any avenue they can to try and control adult content, but in reality the easiest way for the gov't to regulate it would be thru the FCC, go after the satellite companies, the cable companies, the hotel chains, since these guys are by far and away the leading distributors of porn. The internet's really still just a drop in the bucket compared to these distribution channels. The FTC keeps a close watch on companies that bill on the borderline of deceptivity, since they get tons of consumer complaints every day about it. Best thing you can do as a site owner is to make sure your disclosure is clear, correct, and prominent on your site. Yes, it may cost you a signup or two now, but that's better than the legal defense costs if you get nailed.

02-08-2002, 12:36 PM	#14
TheFLY So Fucking Banned Join Date: Jan 2001 Location: http://www.thefly.net/ --- Quit your job and live off steady traffic. Posts: 11,856	Cool...

02-08-2002, 02:21 PM	#15
Snake Doctor I'm Lenny2 Bitch Join Date: Mar 2001 Location: On top of my soapbox Posts: 13,449	I have to side with Sykkboy on this one. As is very common, most webmasters only see Visa rules and regulations through the goggles of "how it affects my bottom line today" without seeing the big picture. There are ALOT of companies out there using deceptive billing practices, making it near impossible for members to cancel, selling them memberships to other paysites while giving the illusion that they are simply completing the first transaction etc etc. Visa and MC know the potential revenue from E-commerce is HUGE for them, and they want to remain the preferred method of payment for ecommerce products and services. In order to do this they have to make Joe Surfer feel "SAFE" when using their CC to make purchases online. Yes there are several people out there who abuse the system and make frivolous chargebacks, but if I'm not mistaken the new rules require the credit card holder to cancel their card and wait to receive a new one when making what KK calls a "duh" chargeback. If Joe Surfer DOES NOT feel safe using their credit card online because a company with deceptive billing practices can overcharge them and the customer has no recourse, then they will stop using their CC's online. If THAT happens it will cost all of us a fuck of a lot more money than any of us will ever have to pay in chargeback fines. Just my __________________ sig too big

02-08-2002, 09:27 PM	#16
NETbilling Confirmed User Industry Role: Join Date: Jan 2002 Location: Huntington Beach, CA Posts: 8,584	Maximum, So since we are not an "aggregator", does that mean you are not interested in having our involvement or backing in I.M.A. ? Mitch __________________ Mitch Farber CEO - NETbilling, Inc. Email / Phone: 888-357-8166 / 661-252-2456 Transaction processing & 24/7 call center services with exceptional rates and flexibility, since 1998!

02-09-2002, 11:17 AM	#18
Maximus Registered User Join Date: Jan 2002 Posts: 81	Mitch, We would love your companies experience and involvement in this association. Netbilling is an excellent company and we would very much include you. Ill let you in on a little secret. When we started in 1996 our original company was called Internet Investments... We worked with a company called Credit Card Network to do our processing, Mark Munchnick was our guy. I beleive CCN was the predesecor to Netbilling or possibly merged, am I right? __________________ Maximus Websitebilling