As a payment processor, we devote a lot of time and energy to applying two crucial principles: Know Your Business (KYB) and Know Your Customer (KYC). If you’ve engaged in this process, you know how difficult it can be, but we go through it to be sure we are onboarding a good merchant. After all, this important step is one of the first lines of defense in the fight against fraud. This month, let’s review three key practices that can help you make sure you know everything you need to know about the partners with whom you do business.
Audit Your Affiliates
Platforms should keep on file a sample agreement that each content management agency uses with their creators.
It only takes one bad merchant to take down an entire payment processor or bank. That’s why getting to know merchants is essential. Payment processors often take a comprehensive approach when onboarding merchants, conducting ongoing monitoring and using third parties to perform daily and weekly comprehensive checks. It’s important to make sure merchants are not involved in any illegal activity, especially since card schemes don’t tolerate it on their network.
Those same measures also comprise best practices for merchants to apply to their own business partners. You need to have a good handle on who your affiliate partners are. At a minimum, merchants should be gathering information like a proper address, bank account data and valid identification for their affiliates.
Additionally, all affiliate landing pages should be approved by the merchant before any traffic is accepted from them. At least once or twice a year, we receive a card brand inquiry regarding an affiliate landing page which has noncompliant content and is pushing sales to one of our compliant merchants. This demonstrates the importance of making sure affiliate landing pages meet your content requirements. One way you can protect yourself is to have policies in place regarding how you KYC your affiliates, approve their marketing pages and manage the traffic they send you.
Be Proactive
Merchants should also be proactive about conducting KYB on studios and third-party producers from which they license content. This includes reviewing on-set policies and verifying how they gather proper model release forms. The Free Speech Coalition website offers examples of best practices and release forms here. All content should be reviewed and approved prior to publishing, to ensure it meets card brand standards.
Cam platforms that rely on cam studios should follow the same best practices, gathering information on cam studio owners, including name, address and bank data. They should also have a deep understanding of how each studio is managed, how the models are treated and whether they have accessible copies of model release forms and/or 2257 adult content age verification information.
It is also important to understand the flow of funds in cam studios. For example, how are the studios paying their cam models? One way to do this is to ask for proof of payment to models. This also ensures the models are actually being paid for their work.
Collect Complete Information
The same concerns apply to fan sites. Many creators rely on content management agencies to help with the administration of their business. If you’re a fan platform relying on agencies to onboard their network of creators to your platform and handle admin, due diligence should be completed to understand how they manage their roster of creators.
Platforms should keep on file a sample agreement that each content management agency uses with their creators. If the agency is responsible for posting content and communication, does it understand the user-generated-content rules of the card brands? Card brands require fan sites to age-verify all who appear in content and review all content prior to posting.
While the adult industry provides many opportunities to work in a safe and secure environment, earn high salaries and work flexible schedules, it is imperative to know whom you’re working with. You and your payment partners can take control by collecting the right information and guaranteeing that you are all meeting the numerous legal and regulatory requirements.
Cathy Beardsley is president and CEO of Segpay, a merchant services provider offering a wide range of custom financial solutions including payment facilitator, direct merchant accounts and secure gateway services. Under her direction, Segpay has become one of four companies approved by Visa to operate as a high-risk internet payment services provider. Segpay offers secure turnkey solutions to accept online payments, with a guarantee that funds are kept safe and protected with its proprietary Fraud Mitigation System and customer service and support. For any questions or help, contact sales@segpay.com or compliance@segpay.com.
