CDG Commerce

Hello,

This merchant initially asked CDG to cancel their account on 11/24 and they were sent the required one-page cancellation form on 11/24. The merchant returned the signed cancellation request form on 12/4 and the account was officially cancelled on 12/6. The merchant was notified in writing that their account was closed on 12/6 and that no termination fee would be charged in accordance with our no termination fee policy.

We have reviewed incoming calls, voicemails and emails to CDG prior to 11/24 and could not find a request to cancel the account nor could we find the merchant expressing concern for any reason when corresponding with CDG.

This merchant's pricing did not increase while with CDG. There was no transaction activity on the account during the 3 months that it was active, so we are unsure as to why the merchant is drawing that conclusion. However, we'd be happy to address any concerns he may have should he contact us directly. Our Support Department can be reached at [email protected] or 888.586.3346 x3.

Finally, although we cancelled this merchant's account within 48 hours from when his signed cancellation form was received, we have submitted a courtesy credit to this merchant's bank account to cover our monthly service fee for the last two months that the account was active.

Hello,

When this merchant applied for an account, they listed their products sold as "General Merchandise" and that description of products is what was approved by our network vendor, ***

Per standard operating procedure, when this merchant processed their first sizable transaction, it was reviewed for a spot validation and during that review it was discovered that this merchant sells brand name products such as *** Bell ***, *** etc. These particular products normally require a merchant to have a licensing/reseller agreement in place with the manufacturer. This is done as a protection to consumers to ensure that anyone who is selling one of these name brand products is selling the actual, legitimate merchandise and not a "knock off" version.

Brand name products are considered high risk in the merchant processing industry as *** has very strict rules and regulations due to the possibility of fraudulent merchandise. Due to the high-risk nature of this merchant's business, our network vendor *** placed transactions on temporary hold, ordered a site inspection to validate operations and also requested any agreements they have in place authorizing them to sell 3rd party goods.

The merchant refused the simple site inspection and as a potential work around, Underwriting requested financial documents. CDG did not WAIVE the site inspection - the Underwriting Department was simply trying to add enough strength to the account in an attempt to get *** to waive the site inspection requirement.

Unfortunately the financial documents provided were not strong enough and the account was closed due to high-risk products being sold, non-compliance of the site inspection, lack of 3rd party agreements and insufficient financials.

As *** has informed this merchant, the only funds being held currently are *** and once the chargeback window has closed on these transactions, the funds will be released back to the merchant per standard operating procedure in the merchant processing industry.

We suggest that the merchant reach out to the 3rd party gateway provider, ***.net to check the status of the alleged *** that was not settled through their CDG account.

Regarding this particular matter, we have responded in detail during all prior responses to the Revdex.com and there is no additional information that we can add. As we have stated at length in the past, our company does not hold any merchant funds and we are not the entity holding this merchant's funds. All funds that are held by the *** risk department are held in a non-interest bearing escrow account. When *** makes the determination that there is no further financial risk to them from any potential chargebacks on this account, the funds will then be released by *** Our company will follow up, as promised, on a set periodic basis in an attempt to request that *** release the funds sooner. We will respond in the same manner to any subsequent follow-ups from this merchant until such a time as *** resolves this matter with them. We do wish the merchant the best of success in the future and we will certainly inform them as soon as we get a confirmation of the funds release from

In the credit card processing industry, each merchant has certain risk parameters/transaction limits that they must abide by when accepting credit cards. Unlike many other processors, our merchants actually get to request their own processing limits when applying for an account.

This merchant requested a particular dollar amount for the total credit card volume that they wanted to process per month and we were able to get that amount approved by our sponsorship bank.

After the account was activated, it sat idle for 8 months with no activity. The merchant then processed a single day's batch of transactions that was greater than their entire approved monthly volume. This prompted a review of their account - per industry standard.

Invoices and bank statements were requested to validate the sales because not only was this single batch greater than their approved monthly volume, it was also made up of many small/identical transactions. An inactive account processing many identical transactions all at once can be an indicator of fraud.

For this reason, the funds in question were placed on a temporary hold.

After speaking with the merchant about these transactions, it was discovered that they were charging cards roughly 6 months prior to services being rendered.

This is another area of concern for sponsoring banks because when a merchant accepts and settles a transaction for services that will be rendered at a later date, the consumer has already paid for the service and then they have to wait for those services to be rendered.

If there are complications/delays for any reason - even uncontrollable reasons like extreme weather, illness, etc. - the consumer has the right to dispute the sale by filing a chargeback with their issuing bank. Chargebacks are a sponsoring bank's #1 concern as they pose the most risk to them in the form of financial loss.

During the review of all information provided about these sales, bank management decided that in a situation where a facility was being rented - as was the case here, they would allow the release of funds if the merchant provided a copy of the contract they had with the facility.

The merchant initially declined to send in the contract, which delayed the process by 5 business days, but they did eventually submit it. The same day that the contract was received and reviewed by our bank, the funds on temporary hold were released to the merchant in their entirety.

From the date of the original batch to the release of the funds was only 9 business days and there was never a hold placed on their funds again as they continued to process with CDG.

We do wish this merchant the best of success with their future endeavors, but the standard operating procedure that was put into place due violation of risk parameters was completed much quicker than other processors - many of whom would have terminated the account and placed a 180 day hold on funds with no recourse.

Hello,

Due to increasing fraud throughout the credit card processing industry, various anti-fraud measures are being utilized much more often by sponsorship banks when it comes to newly activated merchant accounts. This validation is especially important for businesses that run online/card-not-present transactions and for businesses that process large transactions because the potential risk to the bank is much higher. (i.e A transaction for $10,000 carries more risk than a $100 transaction, etc.)

Another factor that all sponsorship banks consider potentially risky is the future delivery of goods and services. In other words, a merchant that accepts and settles a transaction for services that will be rendered at a later date. This is risky because the consumer has already paid for the service and then they have to wait for those services to be rendered. If there are delays for any reason - even uncontrollable reasons like extreme weather, illness, shipping complications, etc. - the consumer has the right to dispute the sale by filing a chargeback with their issuing bank. Chargebacks are sponsoring banks #1 concern as it poses the most risk to them in the form of financial loss.

In this case, ***'s very first transaction was a large, card-not-present transaction and our bank learned that the transaction was processed weeks before he planned on completing the work.

Due to the lack of history with our sponsoring bank and the elevated level of risk this particular transaction posed, our bank placed the transaction on temporary hold and ordered a simple site inspection just to confirm the legitimacy of this merchant. Site inspections are brief and non-invasive where an inspector schedules a time to meet at the merchant's place of business to confirm operations.

CDG informed *** why his funds were being held by the bank and that he would have to submit to a simple site inspection before the funds would be released. The site inspector visited the merchant's listed business address and found that the merchant was not there and there was no inventory at that location. Eventually *** did inform us that his inventory was actually being stored at a different location in a building that is owned by another company and the site inspection was just completed.

This validation review is still in progress and CDG is actively working as the middle man to help our bank validate the business and then release the funds to *** We expect a resolution on this matter later this week.

This merchant has made several statements about our company that are very inaccurate, so we have addressed them below. NOTE: CDG has already explained these facts to the business that filed this complaint to the Revdex.com.

First and foremost, when a cardholder disputes a credit card transaction, the cardholder is immediately given the benefit of the doubt and their account is credited for it. This process was initiated by this merchant's customer, not by CDG or anyone else.

At the same time, the merchant is immediately debited for the sale amount and then given the opportunity to dispute the chargeback through the re-presentment process. That is why this merchant's account was debited for this *** chargeback. Again, this is how the chargeback process works with ALL merchant processors.

It is also important to note that the flow of funds here is between the issuing bank, acquiring bank and the merchant. When a merchant processes a sale, the funds go from the issuer to the acquirer and then to the merchant.

When a sale is charged back, the funds are pulled from the merchant, go to the acquirer and then the issuer. The exact same process applies - only in reverse.

The merchant made the statement that our company "stole" *** That is incorrect in every sense of it.

To begin with, our company, CDG, never touches merchant funds. This is all handled by the banks involved. Not a penny of merchant's money goes through our company. The merchant has demanded that CDG return their money, but we never had it in the first place.

Furthermore, when a chargeback occurs, the funds are returned back to the cardholder's issuing bank and then back to the cardholder's credit line.

This process also works exactly the same for ALL merchant processors.

Thus, no one "stole" anything. The only person who may have "stolen" something would be a cardholder if indeed he received product, but made claims to the contrary or otherwise charged back the purchase.

Only if the chargeback re-presentment is successful, is it reversed and the funds are returned back to the merchant. This process is handled by the cardholder's issuing bank and they make the determination on this - not CDG.

This merchant's attempted re-presentment was originally denied by the issuing bank, so the funds were not returned to the merchant. We then sent a 2nd rebuttal by the merchant to the chargeback department with our acquiring bank and they in turn sent it to the issuing bank for review. As of today this case is still open with the issuing bank and they have until 10-03-2017 to make a decision. If the issuing bank rules in favor of the merchant, the $999 will be deposited into their bank account. Again, per industry standard, this is not something CDG has control of.

In terms of the *** transaction, our acquiring bank held these funds temporarily due to the legitimate concerns caused by the large *** chargeback that had just come through. The merchant then proceeded to state that they would not ship the product that was purchased until they received their funds.

However, this in itself is a violation of Visa/MasterCard policies whereby the merchant is not supposed to use funds from the sale to pay for and ship the product. That is why you will find that retailers who have delayed fulfillment will authorize a sale and then capture the funds on the day that it ships... not use the credit card payment itself as funding for the product.

In either case, it was arranged that a refund would be processed back to the cardholder for the *** through the funds on hold.

During this time, the cardholder for the *** transaction submitted a chargeback as well, so the money was not deposited into the merchant's account. The issuing bank was notified that this transaction was refunded and the chargeback case was dropped.

Amongst the communication related to the disputed transactions referenced above, this business made statements that represented significant violations of their merchant agreement and Visa/MasterCard rules - which they agreed to abide by when signing up for a CDG account - so the account was ultimately terminated by our acquiring bank.