About Us | Contact Us
View Cart

FDIC Issues Warning About Risky Payment Processors

By Vigilize | Wednesday, February 8, 2012 - Leave a Comment

The Federal Deposit Insurance Corporation (FDIC) has issued guidance for banks and other financial services institutions, warning that certain third-party payment processors could prove to be security liabilities.

Attached is revised guidance describing potential risks associated with relationships with third-party entities that process payments for telemarketers, online businesses, and other merchants (collectively “merchants”). These relationships can pose increased risk to institutions and require careful due diligence and monitoring. This guidance outlines certain risk mitigation principles for this type of activity.

Statement of Applicability to Institutions with Total Assets under $1 Billion:

    This guidance applies to all FDIC-supervised financial institutions that have relationships with third-party payment processors.

Highlights:

  • Account relationships with third-party entities that process payments for merchants require careful due diligence, close monitoring, and prudent underwriting.
  • Account relationships with high-risk entities pose increased risks, including potentially unfair or deceptive acts or practices under Section 5 of the Federal Trade Commission Act.
  • Certain types of payment processors may pose heightened money laundering and fraud risks if merchant client identities are not verified and business practices are not reviewed.
  • Financial institutions should assess risk tolerance in their overall risk assessment program and develop policies and procedures addressing due diligence, underwriting, and ongoing monitoring of high-risk payment processor relationships.
  • Financial institutions should be alert to consumer complaints or unusual return rates that suggest the inappropriate use of personal account information and possible deception or unfair treatment of consumers.
  • Financial institutions should act promptly when fraudulent or improper activities occur relating to a payment processor, including possibly terminating the relationship.
  • Improperly managing these risks may result in the imposition of enforcement actions, such as civil money penalties or restitution orders.

ADDITIONAL READING:     Revised Guidance on Payment Processor Relationships


Original notification posted by the Federal Deposit Insurance Corporation (FDIC), which is an independent agency created by the Congress to maintain stability and public confidence in the nation’s financial system by:

  • insuring deposits,
  • examining and supervising financial institutions for safety and soundness and consumer protection, and
  • managing receiverships.

 

Latest News
    As the investigation of the SolarWinds Hack was ongoing, another hack stole some of the limelight… This is the final update on the SolarWinds hack unless a major development comes to light. You can see the previous article here: “Autopsy of the SolarWinds Hack Update“. One of the largest cyber-espionage campaigns in the history of […]
    Employees working from home may find it more difficult to follow security policies… An article review. The surge in employees working from home during the pandemic created many headaches for IT departments around the world, many of whom had no telecommuting policies or procedures before the start… but what about the employees who had to […]
    A Webinar-Movie infotex presents the 2021 update of a previously released webinar presented by our Lead Non-Technical Auditor, Adam Reynolds. This movie-short is intended for those who are planning to participate in an infotex Incident Response Test. Not sure about the importance of an Incident Response Test? Check out onetest.infotex.com for more information! Please let […]
    PRESS RELEASE – FOR IMMEDIATE RELEASE BUSINESS NEWS INFOTEX PROMOTES BRYAN BONNELL TO DIGITAL MEDIA MANAGER infotex, the Managed Security Service Provider, announced Bryan Bonnell’s promotion from Senior Data Security Analyst to Digital Media Manager.  “He will continue his normal DSA duties on a limited basis, because we want everybody to stay in touch with […]
    PRESS RELEASE – FOR IMMEDIATE RELEASE BUSINESS NEWS RYAN HENSLER OF INFOTEX, EARNS CISSP CERTIFICATE Ryan Hensler, Senior NOC Associate of infotex, Inc., recently received the CISSP certification. “Ryan has proven himself to be a seasoned security professional both in his work for infotex and now through achieving this certification.” said Sean Waugh, Information Security Officer. […]
    Dubious app store subscriptions bring in hundreds of millions of dollars in revenue… An article review. When it comes to malicious applications you’re probably familiar with things like malware and ransomware, and you have ways to avoid them.  Modern desktop and smartphone operating systems have built-in malware detection tools, and some web browsers even automatically […]
    Another Manifesto A supply-chain manifesto by the author of Never Say Never: A Password Manifesto! Another one of those Dan’s New Leaf Posts, meant to inspire thought about IT Governance . . . . [Sssshh.  Turn out the lights.  Let’s lower our inner voices, as I have something to propose that might be a bit […]
    Another awareness poster for YOUR customers (and users).  Now that we have our own employees aware, maybe it’s time to start posting content for our customers! Download the large versions here: Awareness Poster (Portrait) Awareness Poster (Landscape)   You are welcome to print out and distribute this around your office.  
    While malware and security exploits continue to make headlines, the majority of reported security incidents involve phishing… An article review. With all the attention given recently to security incidents involving software exploits and high-profile malware attacks, it would be easy to believe that they represented the most likely incidents you may encounter in the wild.  […]
    Implementing Protective DNS could help your organization avoid attack… An article review. Noting the risks still associated with the Domain Name System (DNS), the National Security Agency and the Cybersecurity and Infrastructure Security Agency (CISA) have recently released new guidance on the selection and use of a Protective DNS service (PDNS). The guidance, released in […]