Fraud Risks

• Chargeback Fraud
  • Members disputing charges after receiving benefits or attending events.
• Identity Theft
  • Unauthorized use of personal information to gain membership or make payments.
• Money Laundering
  • Using the organization to process illicit funds under the guise of donations.
• Donation Fraud
  • Fraudulent claims of donations for tax deductions.
• Account Takeover
  • Unauthorized access to member accounts for fraudulent activities.

Regulatory Challenges

• PCI DSS Compliance
  • Ensuring secure handling of payment card data.
• Non-Profit Regulations
  • Adherence to laws governing tax-exempt organizations.
• Anti-Money Laundering (AML) Laws
  • Compliance with regulations to detect and prevent money laundering.
• Data Protection Laws
  • Compliance with GDPR, CCPA, and other privacy regulations.
• Consumer Protection Laws
  • Transparent disclosure of fees, benefits, and terms of membership.

Chargeback Triggers

• Unauthorized Transactions
  • Charges not recognized by the payer.
• Billing Errors
  • Incorrect amounts or duplicate charges.
• Service Disputes
  • Claims that promised benefits or services were not provided.
• Contractual Disagreements
  • Conflicts over membership terms or fees.
• Fraudulent Representation
  • Allegations of misrepresentation by the organization.

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Multiple Payments from the Same Card

• One card used to pay for several memberships or donations.

Unusual Payment Patterns

• Large donations followed by refund requests to different accounts.

International Payments for Local Organizations

• Foreign transactions not typical for the group's membership base.

Inconsistent Member Information

• Discrepancies between member details and payment data.

High-Value Transactions from New Members

• Significant payments without prior engagement with the organization.

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Business Verification

• Confirm the organization's legal status and tax-exempt certifications.
• Verify the physical address and contact information.
• Check compliance with non-profit regulations and reporting requirements.
• Review the organization's mission, history, and reputation.

Financial Assessment

• Review financial statements for revenue stability and financial health.
• Analyze average transaction amounts and processing volumes.
• Assess the impact of fundraising events and campaigns on cash flow.

Risk Evaluation

• Examine historical chargeback ratios and reasons.
• Assess fraud prevention measures and data security protocols.
• Review policies for membership cancellations, refunds, and dispute resolution.

Policy Review

• Ensure clear terms and conditions for membership and donations.
• Verify that refund and cancellation policies are transparent.
• Evaluate compliance with data protection and privacy regulations.

Technology Assessment

• Confirm the use of secure, up-to-date payment processing systems.
• Ensure encryption and tokenization are implemented for data protection.
• Verify adherence to PCI DSS and other security standards.

Reputation Analysis

• Check online reviews and ratings on platforms relevant to the organization's field.
• Investigate any history of regulatory violations or legal issues.
• Assess member satisfaction and responsiveness to concerns.

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Spike in High-Value Donations

• Sudden increase in large contributions from unknown donors, potentially indicating money laundering.

Multiple Chargebacks After Fundraising Events

• Attendees disputing charges post-event, suggesting dissatisfaction or fraud.

Payments from Unrelated Third Parties

• Memberships or donations paid by individuals not associated with the member, raising concerns.

Inconsistent Reporting

• Discrepancies in financial reports or lack of transparency in fund allocation.

Frequent Refund Requests

• Regular demands for refunds, possibly signaling financial instability or fraudulent activity.

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Organization Details

• What is the mission and purpose of your organization?
• How long have you been operating?
• Do you hold any tax-exempt or non-profit status?

Payment Processing Methods

• What payment options are available to members and donors?
• Do you accept recurring payments for membership dues?
• How do you handle international payments, if applicable?

Fraud Prevention Measures

• What procedures are in place to verify member and donor identities?
• How do you secure personal and payment data?
• Do you utilize any fraud detection tools or services?

Regulatory Compliance

• Are you compliant with PCI DSS and data protection regulations?
• How do you ensure adherence to non-profit reporting requirements?
• What measures are in place to comply with AML laws?

Refund and Cancellation Policies

• What is your policy on membership cancellations and refunds?
• How are these policies communicated to members and donors?
• Do you have clear terms regarding fees and benefits?

Member Service and Support

• What channels are available for member communication?
• How do you handle complaints or concerns about services?
• Do you provide regular updates or newsletters to members?

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Transaction Monitoring

• Implement real-time alerts for suspicious activities.
• Regularly review transaction reports for anomalies or patterns indicative of fraud.
• Monitor for multiple payments from the same source or rapid chargebacks.

Compliance Checks

• Ensure continuous adherence to PCI DSS, AML, and other regulatory requirements.
• Stay updated on changes in non-profit laws and implement necessary adjustments.
• Conduct regular audits of payment systems and data security measures.

Security Updates

• Keep systems and software up to date with security patches.
• Implement advanced security features like encryption and multi-factor authentication.
• Train staff on the latest cybersecurity practices and data protection policies.

Merchant Communication

• Maintain open dialogue regarding changes in operations or services offered.
• Provide resources and support for fraud prevention and compliance.
• Encourage reporting of any suspicious activities or security concerns.

Risk Assessment Adjustments

• Reevaluate risk parameters based on changes in transaction volumes or patterns.
• Update underwriting policies as necessary to reflect current risks.
• Monitor fundraising campaigns and events that may affect transaction activity.

Member Feedback Analysis

• Monitor reviews and feedback on social media and relevant platforms.
• Address negative feedback promptly to improve member satisfaction.
• Use feedback to identify potential areas of risk or concern.

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