Hi:

Does someone know the fine/penalty structures for MC violations concerning selling pharmacy products over the internet and any other violations that may exist?

Thanks.

There could be penalties of up to 25K and termination of the merchant accout. It could also be considered a BRAM Violation.

Here is some information - hope it helps:

When the relationship between an illegal or potentially illegal merchant and an acquirer bank is terminated, they oftentimes attempt to re-establish a relationship with another acquirer bank. At that time, such undesirable merchants may send out emails to their past customers informing their past customers that they have re-opened for business. These undesirable merchants are sometimes referred to as "violator" merchants or BRAM merchants. BRAM refers to Business Risk Assessment & Migration (BRAM), which is a program used by MasterCard International Incorporated for eliminating illegal or brand damaging merchants.

In at least some known cases, customers of BRAM merchants will move their business elsewhere when the merchant's relationship with an acquirer is terminated in order to find another source for these illegal or potentially illegal products. In some cases, BRAM merchants will have multiple merchant agreements with acquirers appearing to be different merchants. In addition, certain categories of BRAM merchants will attract common card holders because of addictive behavior (e.g., pharmaceuticals and pornography) or firmly held principals (e.g., terrorism). In some cases, notification channels exist among these consumer communities relative to BRAM merchants.

It is also known that at least some BRAM merchant customers are repeat customers. BRAM merchant customers are also typically geographically diverse and are not likely to make purchases at another non-BRAM merchant.

In at least some cases, credit card networks (e.g., MasterCard.RTM.) will try to locate BRAM merchants and then work to shut them down. At least one known way of a credit card network locating BRAM merchants is to use web crawlers or by receiving phone or email solicitations. Unfortunately, these approaches are reactive and there are delays in identifying violator merchants.

Thanks KatzenJammer for valuable information.

In addition, certain categories of BRAM merchants will attract common card holders because of addictive behavior (e.g., pharmaceuticals and pornography) or firmly held principals (e.g., terrorism).

That's the stupidest thing I've ever heard. No wonder people are not using MC anymore, they suck.

Out of curiosity, jcrewguy, what do you feel is "stupid" about that comment?

I don't know KatzenJammer myself but he provided some valuable pointers in his post. I can tell you first hand that MasterCard and Visa both perform extensive analysis of their global card processing activities and take these kinds of things very seriously.

That's the stupidest thing I've ever heard. No wonder people are not using MC anymore, they suck.

Since when does the truth suck? All they are saying is that people who purchase such things, tend to do so repeatedly.

Out of curiosity, jcrewguy, what do you feel is "stupid" about that comment?

I don't know KatzenJammer myself but he provided some valuable pointers in his post. I can tell you first hand that MasterCard and Visa both perform extensive analysis of their global card processing activities and take these kinds of things very seriously.

Not about KatzenJammer, about MC.

Since when does the truth suck? All they are saying is that people who purchase such things, tend to do so repeatedly.

Terrorists use MC, oh please!

MC use is dropping, and will continue to drop. I cut off all my MC, and I know many others who have too.

The 25k penalty mentioned in the second post is quite an optimistic view.

MasterCard rule 9.1.1 specifically prohibits third party processing and defines a penalty of $2.5k per day from the first day of occurance (no more than $500k per year though).
i.e if you get caught out after 3 months you potentially have nearly $250k at risk.
MC defines other types of fines which may be applied as well, but I don't think you need to worry about those if you understand the above.

If it's pharmacy or any other high risk business doesn't really matter.

Unless you know exactly how to handle this and keep your risk at a minimum, I would be very careful, although it can be done for the long run if managed properly.

MC has imposed those penalties in the past.