By: Greg Baxley, Marketing Coordinator
Elevated Risk Makes Merchant Monitoring Paramount
A case study outlined by G2 last year highlighted a food ingredients company laundered for a spice drug syndicate. The psychoactive substance, also known as synthetic marijuana, potpourri, herbal incense and K2 continues to gain popularity. This year alone, spice has captured widespread media attention, following mass overdoses in Florida, New York and California.
When delving deeper into the violation at the time, G2 quickly determined that the food ingredients store was in fact part of a network of four functionally and visually equivalent ingredient stores with multiple merchant accounts. One site was active, and three more were dormant. To make matters worse, there were five additional active violating sites where the drugs were also being advertised and sold. And three more dormant sites ready to come online be activated at will. Acting as a safety net to ensure the criminal enterprise would carry on in the event that one or more of the accounts were ever terminated.
Responsibility lies with acquirers, ISOs, PSPs and payment facilitators to maintain due diligence and quickly terminate any violation. A violating merchant can also attract the scrutiny of regulators and law enforcement. Making it even more important for acquirers to maintain a solution that detects and prevents transaction laundering, and eradicates violators from merchant portfolios.
Unprecedented Mass Spice Overdoses
Spice is meant to mimic the effects of marijuana. However, it is 10 times more potent than naturally occurring THC. Side effects can include eradicate behavior, respiratory problems, permanent brain damage and even death. As G2 previously detailed, more people are overdosing on spice than ever before. The dangerous trend is skyrocketing in cities globally, due to easy access via online sources. With just a few keystrokes, anyone with a credit card and an internet connection can have drugs delivered right to their doorstep.
CBS News reported this summer that at least 33 people were hospitalized in a single day after overdosing on synthetic marijuana in Brooklyn, New York. A trend that is becoming more common throughout the United States. Just last month, a district attorney in Philadelphia put out an alert after 20 people overdosed on different brands of spice in and around Pennsylvania’s state capital city.
Make the Connections, Find the Launderers
Vendor solutions ensure that acquiring banks, ISOs, PSPs and payment facilitators conduct thorough due diligence at boarding, maintain compliance, mitigate risk and proficiently monitor merchants. Through multifaceted protection, unrivaled data, advanced technology and expert analysis, G2 provides a suite of merchant risk intelligence solutions tailored to meet your needs.
G2 Transaction Laundering Detection offers risk managers a layered solution with extensive data, advanced technology and a streamlined process to eradicate violations from your portfolio. Don’t let fraud slow you down. Eliminate methods, not just perpetrators. Reference The “Spice” Syndicate Case Study to learn more about this evolving threat. Also check out An Organizational Framework for Transaction Laundering Detection to better position your team against fraud.