opinion

MC Bans Certain Cross Sales

Tom Hymes
Ron Cadwell of CCBill posted up the long-anticipated news late last night.

"Effective Immediately MasterCard is going to enforce rule 5.10.1

"Pre-Checked Cross sells are now officially DEAD!!!!!!!!!!!
Fines will be 50k per week per account
30 days for banks to cancel all accounts or termination of their right to process

"This rule will not affect IPSP accounts since we are viewed as a single merchant in MasterCard's eyes.

"WOW!!!!!!!!!!! The day before Christmas this is really PRICELESS"

He can say that again. M/C, and soon Visa, have been alerted to a very serious problem which they will now attempt to correct. The new rule reads:

5.10.1 Sale or Exchange of Information
A Merchant must not sell, purchase, provide, exchange or in any manner disclose Card account number, Transaction, or personal information of or about a Cardholder to anyone other than its Acquirer, to the Corporation, or in response to a valid government demand. This prohibition applies to Card imprints, TIDs, carbon copies, mailing lists, tapes, database files, and all other media created or obtained as a result of a Transaction.

In the middle of the aforementioned thread, Cadwell responds to a poster who theorizes that it was pressure from the DoJ that prompted this crackdown with a resounding "Bingo!" He obviously knows much more than he explained in his opening post, but then again he always does.

As mentioned, this move has been brewing for awhile and many people knew it was coming. What's interesting is it's timing, almost simultaneous with the release of the revised 2257 regulations. Even a non-conspiracy theorist might discern a coordinated action, but who knows. The rule changes were announced in October; that they are effective immediately means that a 60-day rule was probably in effect, and that banks and processors have been working overtime to get themselves and their clients into compliance, or get rid of them.

I know of one owner of a large program who was recently rejected (and chided) by one of the prominent IPSPs because he was engaging in practices explicitly banned by the new rule. He was angry about it, too; felt it was unfair and that he should be able to manage his own billing affairs as he saw fit if it made his operation run more efficiently, and that others corrupt practices should not prevent him from doing just that. MasterCard/Visa do not agree.

There is a lot to digest here, but it is clear to everyone that this is a long-overdue move to correct some very, very bad billing practices that have proliferated over the past few years. In continuing to allow the practice of non pre- or pre-checked cross sales by ISPSs, which the card companies have always regulated with a heavy hand, we are seeing what we have seen before, a strong move to consolidate authority in the billing companies considered the most responsible and responsive with respect to ever-creative corrupt practices.

In post #25, Cadwell even comments, "Notices and fines have already gone out to the banks and they are in the millions." One presumes the fines are in the millions, not the banks! ;-)

Looks like Spring cleaning has arrived during Winter this year. Merry Christmas!

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