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#2598 - 06/26/01 06:50 PM Merchant Verifications
wwmike Offline
Junior Member
wwmike
Joined: Dec 2000
Posts: 30
walla walla, wa, usa
I'm suddenly hearing that some financial institutions are contacting their service providers and having existing "merchant verification/funds availability" features on voice response systems turned off. Has there been something new put out by federal agencies that says we cannot respond to these merchant inquiries? OR Is it still up to our interpretation of the exceptions and how they apply to this service?

Thanks for any help?


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General Discussion
#2599 - 06/26/01 06:54 PM Re: Merchant Verifications
Princess Romeo Offline

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Princess Romeo
Joined: Jun 2001
Posts: 8,272
Where the heart is
I attended the InterAgency Privacy Training seminar hosted by the Federal Reserve. I asked the regulators about this issue, and their response was:

"GLB was never intended to stop a normal banking procedure such as verifying checks." There were amazed that some banks were taking the interpretation that check verification was suddenly a no-no.

_________________________
CRCM,CAMS
Regulations are a poor substitute for ethics.
Just sayin'

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#2600 - 06/26/01 07:22 PM Re: Merchant Verifications
Lucy Griffin Offline

Diamond Poster
Lucy Griffin
Joined: Nov 2000
Posts: 1,544
There is a lot of over-reaction out there. Bonnie is right that G-L-B wasn't intended (not consciously, anyway) to interfere with normal banking practices. Think of this activity as one that is requested by the customer as a part of his or her banking relationship with you.

I find that it helps to answer the coverage question by asking whether the practice being challenged is more like normal banking and appropriate to the transaction or more like selling customer information including account numbers to a travel agency. That's what brought down the law!


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#2601 - 06/26/01 07:36 PM Re: Merchant Verifications
Mary Beth Guard Offline
Platinum Poster
Mary Beth Guard
Joined: Oct 2000
Posts: 797
Oklahoma City, OK
It's one thing to respond to a phone call from a merchant seeking to verify funds are available to cover a check written to the merchant where you can take precautions to ensure the identity of the caller and the validity of the information request. It's quite another thing to operate a merchant verification line that allows an anonymous caller to dial an automated response system number listed in the phone book (or choose that option on the voice response system menu of choices) and key in an account number and an amount and receive information about whether or not a check in that amount on that account would clear.

How do you protect against fraud in such a situation? What would prevent someone from obtaining an account number, either legitimately, or through some pretext, and calling the merchant verification line and entering in any amount they make up, thus learning the parameters of the customer's balance?

You always have to take into account not only the privacy rules, but also the Interagency Guidelines for Safeguarding Customer Information. I do not believe most automated merchant verification lines offer sufficient protection against pretext calling.


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#2602 - 06/26/01 09:05 PM Re: Merchant Verifications
Anonymous
Unregistered

Our merchants must enroll in this program, sign an agreement and are given a PIN number to gain access to the system and are limited to a certain number of calls per day. Do you think that would meet the requirements regarding pretext calls?

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#2603 - 06/26/01 09:54 PM Re: Merchant Verifications
wwmike Offline
Junior Member
wwmike
Joined: Dec 2000
Posts: 30
walla walla, wa, usa
I appreciate the input. Even though we can provide the verifications, Mary Beth's comments re: fraud have certainly hit a nerve. We recently suffered a loss through wire fraud and I believe the amount of the wire was determined by one or more voice response verification calls after the bad guys stole our customers check out of the mail(to Africa). Protection via PINS or passwords or a "call back" requirement should be included as part of "information security" procedures.

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#2604 - 06/26/01 11:45 PM Re: Merchant Verifications
Princess Romeo Offline

Power Poster
Princess Romeo
Joined: Jun 2001
Posts: 8,272
Where the heart is
And on the other side of the coin, we now have customers getting upset with us because of our increased security measures. Even though we explain the need for greater control in this age of instant information and Identity Theft, that doesn't matter to a customer who has been used to a certain way of doing things and must now be "inconvenienced." (You KNOW me - I've been banking here for 20 years!!!!!!!)

Between these complaints and the complaints from customers who want to "Opt-Out" when we don't share anyways, that Lottery jackpot was looking very enticing...until someone ELSE won the thing!

As Lucy said in a thread below - "It's going to be a long, hot summer."

_________________________
CRCM,CAMS
Regulations are a poor substitute for ethics.
Just sayin'

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#2605 - 06/27/01 10:57 AM Re: Merchant Verifications
Mary Beth Guard Offline
Platinum Poster
Mary Beth Guard
Joined: Oct 2000
Posts: 797
Oklahoma City, OK
Bonnie, your lottery comments gave me such a laugh. Since Oklahoma doesn't have a lottery, we just have to dream about taking home the big Bingo jackpot. ;-)

In response to Susan's post, I do think that a more sophisticated system which is only accessible to approved merchants, uses a PIN for tracking purposes, and limits the number of queries, would probably satisfy the information security requirements.


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