A guide for underwriters at ISOs and Acquirers onboarding MCC 7311 advertising and media buying merchants, covering risk assessment, fraud signals, and the underwriting questions that matter.
If you're underwriting an advertising agency, MCC 7311 concentrates risk around large media-buy pass-throughs, performance disputes over campaign results, and the agency fronting ad spend on cards. A single failed campaign can trigger a high-value chargeback. Here's what to look for.
Key Information
This guide covers advertising services, where media-buy pass-throughs, performance disputes, and fronted ad spend drive high-value chargeback and credit exposure.
Typical Business Types
Full-Service Ad Agencies
#1
Agencies handling creative, strategy, and media buying.
Digital Media Buyers
#2
Firms placing paid search, social, and programmatic ads.
Performance Marketing Agencies
#3
Agencies billing on results and managing client ad spend.
Payment Processing Information
Transaction Types
1
Media Buy Pass-Through
Client ad spend billed through the agency to platforms.
2
Monthly Retainer Billing
Recurring charge for ongoing campaign management.
3
Campaign Setup Fee
Upfront charge to launch a new campaign.
4
Performance Bonus Billing
Charges tied to results or conversion targets.
5
Creative Production Charge
Billing for design, content, and asset creation.
Common Payment Methods
Credit Cards - Used for retainers and fronted media spend
ACH and Wire Transfers - Common for large media budgets
Card-on-File Recurring - Stored cards for monthly retainers
Invoicing Platforms - Net-term billing for corporate clients
Digital Wallets - Occasional use for smaller fees
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Performance Disputes - Chargebacks when campaigns underperform
Media Spend Pass-Through Risk - High-value disputes over fronted ad budgets
Friendly Fraud - Disputes over delivered campaign work
Retainer Cancellation Disputes - Charges contested after engagement ends
Result Disagreement Chargebacks - Disputes over unmet performance claims
Regulatory Challenges
Advertising Truth Standards - Rules against deceptive advertising claims
FTC Endorsement Guidelines - Disclosure of sponsored and influencer content
Data Privacy and Tracking Rules - Consent for ad targeting and tracking
Platform Advertising Policies - Compliance with ad network terms
PCI Compliance - Payment card data security
Common Fraud Signals
Large Media Pass-Through Volume
High charges representing fronted client ad spend.
Performance-Based Billing
Revenue tied to contested campaign results.
High Average Ticket Sizes
Engagements with significant chargeback cost if disputed.
Example Scenarios and Red Flags
Performance Dispute Chargebacks
Large disputes when campaigns miss targets.
Media Spend Reversal Risk
Fronted ad budgets contested by clients.
Retainer Cancellation Disputes
Spikes in disputes after engagements end.
Result Disagreement Patterns
Disputes tied to unmet performance promises.
Missing Campaign Documentation
Charges without reporting or signed scope.
Common Underwriting Questions
UW Tips Business
Verify agency registration and standing
Confirm office, principals, and client roster
Review contracts covering media spend and performance
UW Tips Financial
Recognize high tickets with fronted media spend exposure
Review revenue mix of retainer, media, and performance fees
Assess client concentration and budget sizes
UW Tips Risk
Examine chargeback ratios on performance and media disputes
Evaluate documentation of campaign results
Review media spend funding and reconciliation
UW Questions Business
What advertising services do you provide?
Do you front client media spend on cards?
Are engagements retainer, project, or performance-based?
UW Questions Payments
What share of charges is media pass-through versus fees?
How do you fund and reconcile media spend?
How are retainers and performance bonuses billed?
UW Questions Fraud
How do you document campaign delivery and results?
What controls cover fronted media spend disputes?
How do you handle performance disagreements?
UW Questions Compliance
Are you PCI compliant and when was your last assessment?
Do you meet FTC and advertising disclosure standards?
How do you handle ad targeting and privacy consent?
UW Questions Chargebacks
What is your chargeback ratio and which reasons dominate?
How do you defend performance and media disputes?
Do you retain campaign reports and signed contracts?
UW Questions Infrastructure
Are billing, ad platform, and reporting systems integrated?
How do you reconcile media spend against client billing?
Do you document campaign results and delivery?
Ongoing Monitoring
Transaction Monitoring
Watch performance dispute volume
Track media pass-through against settlement
Review retainer cancellation patterns
Compliance Checks
Maintain agency standing and registrations
Keep PCI assessments current
Stay current on FTC and privacy rules
Security Updates
Use tokenization for stored retainer cards
Apply controls on fronted media spend
Document campaign reporting and delivery
Risk Assessment
Limit exposure from fronted media spend
Tighten performance terms to reduce disputes
Monitor large campaigns for chargeback risk
Merchant Communication
Help the merchant document campaign delivery and results so performance disputes can be defended. Share practices for funding and reconciling fronted media spend. Support contract terms that limit exposure on large media budgets.
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