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Gambling, Gadgets, and The Risk to Your Merchant Portfolio

Illicit Gambling Sites

Bogus “gadget” websites are putting merchant acquirers at risk for card network fines and assessments.

G2 analysts have seen a recent increase in illegal gambling sites laundering their transactions through gadget sites—usually a simple site selling a few select items, often consumer electronics, power tools, or sporting goods.

Transaction laundering—one merchant processing payment card transactions on behalf of another merchant—is illegal. If discovered, the card brands can exact heavy fines on you, the payment provider.

In a recent case, we found an online casino using a “Smart Accessories” site to process gambling subscriptions. From the customer’s point of view, the card information was taken and charged as expected. However, when G2 analysts ran test transactions, they found that the subscription payment was processed by the Smart Accessories merchant account.


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The Business of Gadget Sites

Because gadget sites are so often associated with gambling, they are often referred to as being part of a “gambling network,” but in reality, they have a much broader reach. G2 analysts are finding gadget sites fronting for multiple content types—illegal pharma, negative-option billing, adult content, as well as their mainstay…gambling.

An aspect of gadget sites often overlooked is that gadget site owners work to grow their businesses in often traditional ways, such as placing ads. Those ads might even target the same legitimate merchants that you want to board by offering credit card processing when in reality they are promoting shell websites for illegal transaction laundering.


Illegal Payment Processing


As fraudsters become more advanced, it’s critical that your merchant monitoring keeps pace. The best way to do this is to partner with a merchant monitoring expert that combines technology with human analyst expertise. Algorithm-only solutions deliver high false positives, which tax your operations, and miss nuanced attacks like those found in transaction laundering schemes.

For more on transaction laundering, download Real-life Launderers: A Collection of Transaction Laundering Cases. If your portfolio includes gambling merchants, download this 5-step guide for Managing High-risk Gambling Merchants.

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