Blacklisting

Blacklisting

In e-commerce, blacklisting refers to the system by which merchants record the personal information and transaction history of untrustworthy clients. Cards that were used or that are suspect of have been used in fraudulent transactions are compiled in a database and after having been blacklisted, they will always be subject to rejection by the system. The purpose of blacklisting is to prevent fraud. Likewise, it helps reducing financial losses.

At present, there are many fraud-screening software options in the market from which to choose. They offer the merchants the possibility of automatically blacklist/block shoppers based on the following classification: by IP address, e-mail address, credit card number, country, city or region.

In addition to having individual blacklists, merchants also have the option to join a blacklist community of merchants in which information compiled by thousands of merchants is exchanged to create a so-called master list of blacklisted individuals.

Card Associations and Blacklisting: The Member Alert to Control High-Risk (MATCH) list

The card association (i.e. MasterCard and Visa) also compile a blacklist which is known as the Member Alert to Control High-Risk (MATCH) list or formerly as the Terminated Merchant File (TMF). However, instead of listing deceitful buyers; they keep a registry of those merchants who have infringed the card associations’ rules. The main causes of this type of blacklisting are the following: fraud, money laundering, insolvency, factoring (the selling of invoices by a business owner to a third party at a discount), dealing with a disproportionate number of chargeback cases and closing an account with a negative balance.

In other words, the MATCH list is used to categorize those merchants who had their accounts terminated because of incurring in one of the previously mentioned causes. It is important to point out that the decision on who is to be added to the MATCH list is done in full discretion by the acquiring (processing) banks and not by the card association. Furthermore, the acquiring bank has such a decisive role into the process that once it has added a merchant to the list, it is the only one who can remove it from it. Hence, to be removed from the list, the merchant must work in close cooperation with the acquirer.

This fraud prevention tool is also vastly used by the acquirers to check if applicants to a merchant account have been subject to termination in the past, and based on that information the application is accepted or rejected. Yet, according to the card association rules, it is not prohibited to take on merchants who are on the list.

One negative aspect of the MATCH list is that MasterCard does not confirm the truthfulness of the information added to the list, so that it leaves all in the hands of the processing banks. In spite of that, in the US, it is obligatory for the issuing banks to be part of the MATCH list system.