MasterCard On Stricter Compliance

PURCHASE, New York – Credit card behemoth MasterCard International once again pointed the finger in the face of the pornography industry, this time with a stern warning to members that its card services will not be used for illegal activities.

The bulletin, published this week, pinpointed the porn industry, gaming, and prescription drug businesses as being high risk industries that are most likely to conduct nefarious financial transactions. Some sources claim that the porn industry accounts for at least 50 percent of all online fraud and that gaming accounts for only 5 percent.

"We're issuing the bulletin to remind our global membership that MasterCard does not tolerate illegal activities of any kind," the company stated.

The credit card company also reminded users that at any given time, failure to comply with its stringent policy could lead to slew of penalties, which would include the termination of membership.

MasterCard claims that its recent warning to the porn industry and others is based on the increasing amount of Internet fraud and the use of MasterCard "for activities that may not be legal in all jurisdictions," the company said in a statement.

The credit card giant also warned the Internet community that it is working alongside federal and state law enforcement agencies including the Drug Enforcement Administration, the Food and Drug Administration, the U.S. Secret Service, the Department of Justice, and the Federal Bureau of Investigation to get a handle on Internet fraud, child pornography, and other illegal activities that its card services might be used for.

MasterCard has made a push lately to work with law enforcement on clamping down on individuals who use member services for the illegal distribution of child pornography.

MasterCard's key compliance points for controlling illegal activities include:

1) Conducting due diligence on merchants before they are issued MasterCard credit cards and confirming that their businesses are legitimate and not illegal. The member financial institution will also be required under MasterCard's new rules to reconfirm on a regular basis that the website continues to be legitimate and is being used for legal means.

2)  Members must ensure that transactions are identified properly. For example, an authorization request involving Internet gambling transactions must contain the proper codes indicating that the transaction is a gaming transaction and is being conducted by the cardholder via the Internet. Members can reject a transaction if they have any doubts about its legality.

"MasterCard is issuing this bulletin because there have been many questions raised recently about the use of payment cards relative to a range of potentially illegal activities," the company said in a statement. "We therefore felt that it was appropriate at the beginning of the New Year to reinforce to our members and other constituencies that we have many standards that address these issues and provide safeguards and that MasterCard will not tolerate non-compliance with law."

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