educational

The Excited States of America

The above title is extremely fitting today in banking. The endless closing down of banks, the continued shutting down of business checking accounts for adulttype merchants and the unrelenting pressure for banks not to process for adulttype merchants demonstrates the applicability of this statement.

Further, there are three recent developments of which we should all be cognizant:

Regulators are specifically targeting merchants with chargebacks without regard to whether you are compliant or not with the payment rules.
  • A new U.S. government task force;
  • A new surge of UDAP (Unfair or Deceptive Acts or Practices) activity; and,
  • A focus on merchants with multiple accounts at multiple banks.

On Oct. 27, at the ETA’s Compliance Day in Chicago, a Federal Trade Commission official told attendees that the government has formed a task force to monitor third-party payment services providers. The stated goal is to prevent fraudulent merchants from obtaining merchant accounts and to shut down such merchants as quickly as possible if they defraud consumers.

The group has some very heavy hitters and includes the FTC, the Justice Department, the FBI, the U.S. Treasury Department’s FinCen antimoney-laundering unit, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp.

Bank regulators have embraced UDAP, the acronym that stands for Unfair or Deceptive Acts or Practices to justify their investigation into certain merchant activity and thus be able to impose penalties on merchants who otherwise were compliant in their respective payment channels. It seems, nowadays, that there is so much attention on consumer protection that if a merchant has just one chargeback or one unauthorized transaction, then it is the belief of the regulators that a consumer was harmed and thus, there is enough evidence to warrant an investigation into the merchant’s practices.

The strength of this law is that it is very general, providing authorities with the ability to apply it to many different situations that arise. Currently, it is being used to address “unethical” or otherwise “bad” business practices that may not necessarily fall directly under the purview of a specific banking or consumer finance law.

It has come to the attention of the FTC specifically, but no doubt also to the payment associations, that merchants that have many merchant accounts across many banks may not be doing this for a business reason other than to keep their merchant account compliant under the card association rules.

A news article from Digital Transactions reported that the representative from the FTC stated: “We have found blatant misrepresentations on applications,” FTC representative said. Regarding one person trying to get multiple merchant accounts, she added, “We pay attention to little things that add up to the same person.”

She noted that the FTC has seen cases of 20 to 50 descriptors tied to one account. The purpose of so many accounts ultimately held by a single entity is to keep chargebacks in any one account below Visa Inc. and MasterCard Inc. thresholds that would draw scrutiny and even account closure.

This new task force, in theory, will speed up the communication and the “knowledge-bank” between these various entities to uncover questionable merchants. The fact that they are stating that they will be focusing on the ISO or third-party provider means that you will now have to answer more questions about your business so that the ISO/TPP can protect themselves. Further, as we have seen fewer banks in the marketplace, there will be fewer ISOs and third-party providers that will be willing to take on ecommerce business, let alone registered highrisk ecommerce merchants.

Regulators are specifically targeting merchants with chargebacks without regard to whether you are compliant or not with the payment rules.

And authorities are hunting for merchants who have multiple merchant accounts across multiple banks. Unless you have a reasonable business reason to obtain multiple accounts, anything beyond reasonable poses a risk. I would also suggest that if the only reason your merchant accounts are compliant is that they are under the number of chargeback threshold rule, then you need to discover the source of your fraud and better mitigate it. Speak with a knowledgeable firm to analyze your transactions and system to help you stay out of harm’s way.

Even with all the focus as detailed above, there is one thing that remains constant throughout the efforts: no authority is willing to investigate the other half of the transaction: That is the consumer.

Related:  

Copyright © 2025 Adnet Media. All Rights Reserved. XBIZ is a trademark of Adnet Media.
Reproduction in whole or in part in any form or medium without express written permission is prohibited.

More Articles

opinion

WIA Profile: Lainie Speiser

With her fiery red hair, thick-framed glasses and a laugh that practically hugs you, Lainie Speiser is impossible to miss. Having repped some of adult’s biggest stars during her 30-plus years in the business, the veteran publicist is also a treasure trove of tales dating back to the days when print was king and social media not even a glimmer in the industry’s eye.

Women in Adult ·
opinion

Fighting Back Against AI-Fueled Fake Takedown Notices

The digital landscape is increasingly being shaped by artificial intelligence, and while AI offers immense potential, it’s also being weaponized. One disturbing trend that directly impacts adult businesses is AI-powered “DMCA takedown services” generating a flood of fraudulent Digital Millennium Copyright Act (DMCA) notices.

Corey D. Silverstein ·
opinion

Building Seamless Checkout Flows for High-Risk Merchants

For high-risk merchants such as adult businesses, crypto payments are no longer just a backup plan — they’re fast becoming a first choice. More and more businesses are embracing Bitcoin and other digital currencies for consumer transactions.

Jonathan Corona ·
opinion

What the New SCOTUS Ruling Means for AV Laws and Free Speech

On June 27, 2025, the United States Supreme Court handed down its landmark decision in Free Speech Coalition v. Paxton, upholding Texas’ age verification law in the face of a constitutional challenge and setting a new precedent that bolsters similar laws around the country.

Lawrence G. Walters ·
opinion

What You Need to Know Before Relocating Your Adult Business Abroad

Over the last several months, a noticeable trend has emerged: several of our U.S.-based merchants have decided to “pick up shop” and relocate to European countries. On the surface, this sounds idyllic. I imagine some of my favorite clients sipping coffee or wine at sidewalk cafés, embracing a slower pace of life.

Cathy Beardsley ·
profile

WIA Profile: Salima

When Salima first entered the adult space in her mid-20s, becoming a power player wasn’t even on her radar. She was simply looking to learn. Over the years, however, her instinct for strategy, trust in her teams and commitment to creator-first innovation led her from the trade show floor to the executive suite.

Women in Adult ·
opinion

How the Interstate Obscenity Definition Act Could Impact Adult Businesses

Congress is considering a bill that would change the well-settled definition of obscenity and create extensive new risks for the adult industry. The Interstate Obscenity Definition Act, introduced by Sen. Mike Lee, makes a mockery of the First Amendment and should be roundly rejected.

Lawrence G. Walters ·
opinion

What US Sites Need to Know About UK's Online Safety Act

In a high-risk space like the adult industry, overlooking or ignoring ever-changing rules and regulations can cost you dearly. In the United Kingdom, significant change has now arrived in the form of the Online Safety Act — and failure to comply with its requirements could cost merchants millions of dollars in fines.

Cathy Beardsley ·
opinion

Understanding the MATCH List and How to Avoid Getting Blacklisted

Business is booming, sales are steady and your customer base is growing. Everything seems to be running smoothly — until suddenly, Stripe pulls the plug. With one cold, automated email, your payment processing is shut down. No warning, no explanation.

Jonathan Corona ·
profile

WIA Profile: Leah Koons

If you’ve been to an industry event lately, odds are you’ve heard Leah Koons even before you’ve seen her. As Fansly’s director of marketing, Koons helps steer one of the fastest-growing creator platforms on the web.

Women in Adult ·
Show More