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#1514356 - 02/24/11 08:23 PM Reg GG (Internet Gambling)
aloha 808 Offline
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Joined: Apr 2010
Posts: 22
Reg GG requires FIs to block restricted (internet gambling) transactions for commercial customers. I have considered blocking e-commerce transactions with an MCC (merchant mategory code) of 7995 (gambling) for our commercial BIN. However, I am stuck on (1) statement from the Reg:

"The Act states that none its provisions shall be construed as altering, limiting, or extending any Federal or State law or Tribal-State compact prohibiting, permitting, or regulating gambling w/in the US. See 31 USC 5361(b). In addition, the Act states that its provisions are not intended to change which activities related to horseracing may or may not be allowed under Federal law, are not intended to change the existing relationship between the Interstate Horse Racing Act of 1978 (IHA 15 USC 3001 et seq) and other Federal statues in effect on 10/13/06, the date of the Act's enactment..." [233.1(a)]

Does this mean we cannot block internet gambling related to horseracing? And if so, any suggestions how I can allow horseracing internet transactions to go through.

Thank you!

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#1514482 - 02/24/11 11:07 PM Re: Reg GG (Internet Gambling) aloha 808
BrianC Offline
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BrianC
Joined: Nov 2004
Posts: 6,325
Illinois
As it relates to commercial customers, you shoiuld be monitoring to ensure that they are not engaged in payment processing for illegal internet gambling, whether through accepting debit/credit cards, using ACH originaltion, remote deposit capture, remotely created checks, wire transfers, etc.

The requirement to block MCC code 7995 relates to stopping all customers from paying to gamble online using their debit card so you should be blocking your personal BIN as well.

Since the gambling for horseracing within the US is legal, I block all international debits with an MCC code of 7995 and exclude the US country code for that authentication blocking rule.
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#1514562 - 02/25/11 02:27 PM Re: Reg GG (Internet Gambling) BrianC
Georgia Plum
Unregistered

crowman3, your statement

Since the gambling for horseracing within the US is legal, I block all international debits with an MCC code of 7995 and exclude the US country code for that authentication blocking rule.

By not blocking 7995 for the US aren't you essentially allowing any code 7995, legal or illegal, to post if its within the US?

Also, I don't recall that there is a 'requirement' to block that code for consumer accounts.

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#1514581 - 02/25/11 02:38 PM Re: Reg GG (Internet Gambling)
raitchjay Offline
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Joined: Oct 2009
Posts: 8,771
OK
I think the language of 233.6 clarifies that by following due diligence at account opening, the "need" to monitor individual transactions for commercial customers goes away, minus "actual knowledge".
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#1514692 - 02/25/11 04:10 PM Re: Reg GG (Internet Gambling)
BrianC Offline
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BrianC
Joined: Nov 2004
Posts: 6,325
Illinois
(d) Card system examples. The policies and procedures of a card system operator, a merchant acquirer, third-party processor, or a card issuer, are deemed to be reasonably designed to identify and block or otherwise prevent or prohibit restricted transactions, if the policies and procedures--
(1) Provide for either--
(i) Methods to conduct due diligence--
(A) In establishing a commercial customer account or relationship as set out in Sec. 233.6(b); and
(B) As set out in Sec. 233.6(b)(2)(ii)(B) in the event that the participant has actual knowledge that an existing commercial customer of the participant engages in an Internet gambling business; or
(ii) Implementation of a code system, such as transaction codes and merchant/business category codes, that are required to accompany the authorization request for a transaction, including-- (A) The operational functionality to enable the card system operator or the card issuer to reasonably identify and deny authorization for a transaction that the coding procedure indicates may be a restricted transaction; and
(B) Procedures for ongoing monitoring or testing by the card system operator to detect potential restricted transactions, including--
(1) Conducting testing to ascertain whether transaction authorization requests are coded correctly; and
(2) Monitoring and analyzing payment patterns to detect suspicious payment volumes from a merchant customer; and
(2) For the card system operator, merchant acquirer, or third-party processor, include procedures to be followed when the participant has actual knowledge that a merchant has received restricted transactions through the card system, such as--
(i) The circumstances under which the access to the card system for the merchant, merchant acquirer, or third-party processor should be denied; and
(ii) The circumstances under which the merchant account should be closed.

The Reg identifies that a card issuer is responsible for transaction blocking in addition to the merchant processor, so yes we need something in place.

I double checked my rule, and I am blocking domestic and international so I stand corrected on that. The exception I put in is that I'm only blocking keyed, card not present transactions (online). Card swiped in person transactions (if the customer is at the OTB or casino) will work just fine.
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#1514901 - 02/25/11 07:22 PM Re: Reg GG (Internet Gambling) BrianC
Georgia Plum
Unregistered

but again, there is no requirement to block any transactions on consumer accounts, only business accounts.

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#1669524 - 02/24/12 04:54 PM Re: Reg GG (Internet Gambling) Anonymous
Libby M. Offline
Platinum Poster
Joined: Sep 2007
Posts: 578
Mississippi, USA
I would be interested to know if anyone is exempting religious organizations from certifying that they are not engaged in illegal internet gambling.
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Lela Purvis, CRCM/CCBCO/CBAP


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#1669569 - 02/24/12 05:49 PM Re: Reg GG (Internet Gambling) Libby M.
Bob The Banker Offline
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Bob The Banker
Joined: May 2010
Posts: 958
Originally Posted By: ilovebulldogs!
I would be interested to know if anyone is exempting religious organizations from certifying that they are not engaged in illegal internet gambling.

Why would you?

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#1669639 - 02/24/12 07:13 PM Re: Reg GG (Internet Gambling) Bob The Banker
Libby M. Offline
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Joined: Sep 2007
Posts: 578
Mississippi, USA
My thoughts exactly! Thanks!
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#1670906 - 02/29/12 11:23 AM Re: Reg GG (Internet Gambling) aloha 808
accountlady Offline
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Joined: Apr 2007
Posts: 17
But the problem is that they aren't coding the transactions to represent internet gambling. Also, if the customer disputes the charges that were coded as a good or service but were actually gambling charges, then what?

Process the dispute and wait for a response (which if it was fradulently coded incorrectly, probably won't come) and then charge it back? Still no real proof that it was a gambling transaction.

We have been giving customer a credit and charging the merchant/processors account. Is that the correct way to handle this? Should it be handled differently whether debit or credit?
Last edited by accountlady; 02/29/12 11:24 AM.
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#1670909 - 02/29/12 11:58 AM Re: Reg GG (Internet Gambling) aloha 808
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 79,651
Galveston, TX
Both M/C and Visa prohibit their cards to be used for illegal purposes. Most banks cancel cards once they figure out that the customer may be involved in internet gambling. That way you only deal with this situation once by following Regulation E and card issuer rules.
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#1671062 - 02/29/12 03:15 PM Re: Reg GG (Internet Gambling) rlcarey
accountlady Offline
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Joined: Apr 2007
Posts: 17
True, but there is no way to confirm they are using it for this purpose when the charges are not coded to reflect this. That is why if these charges are disputed and there is no reply from the processor/merchant, we permanently credit the customers account. Right? This is a basic flaw in the system IMO.

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#1671089 - 02/29/12 03:28 PM Re: Reg GG (Internet Gambling) aloha 808
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,281
Well, fraud is always a way around the rules until the person or company is caught.
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HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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