Businesses that accept credit cards need to be aware of the many laws and regulations that govern this area. By working with a legal professional, businesses can be sure that they are following all the necessary rules and regulations and taking full advantage of the benefits that come with using credit cards for business.
Here are some of the reasons why businesses should consult legal professionals when it comes to using credit cards.
Ensure compliance with laws and regulations
Several laws and regulations govern the use of credit cards for business purposes. For instance, the Credit CARD Act of 2009 imposes certain restrictions on how businesses can advertise and promote their credit cards. Or, the Dodd-Frank Wall Street Reform and Consumer Protection Act imposes new rules on how businesses can offer credit cards to customers.
On the other hand, if customers use their credit cards to purchase your products or services, you as the merchant must comply with the Payment Card Industry Data Security Standard (PCI DSS). This standard includes several requirements for how businesses must handle credit card data, such as ensuring that data is properly encrypted. A legal professional can help businesses make sure they comply with PCI DSS and other relevant laws and regulations.
Merchant Alert To Control High-Risk Transactions
Several factors can make a business a high-risk merchant, such as the type of products or services sold, the average transaction amount, or the countries where transactions originate. If your business is classified as high risk, you may have trouble getting approved for a merchant account with a traditional bank.
However, there are several specialized banks and payment processors that work with high-risk merchants. A legal professional can help you identify these institutions and negotiate the best terms for your business or they can show you how to get off matchlist. This list is a blacklist of high-risk businesses that are not allowed to process credit card payments.
Protect Your Business From Fraud
Credit card fraud is a serious problem for businesses, as it can lead to significant financial losses. For instance, if someone uses a stolen credit card to purchase your business, you will be responsible for the charge. Or, if you accept a fake or counterfeit credit card, you may be liable for the charges.
A legal professional can help you understand your rights and obligations under the Fair Credit Billing Act and other relevant laws. They can also help you develop policies and procedures to prevent fraud, such as requiring signatures for all purchases or only accepting credit cards from certain countries.
Reduce the Risk of Chargebacks
A chargeback occurs when a customer disputes a credit card charge and asks their bank to reverse the transaction. Chargebacks can be costly for businesses, as they typically involve fees charged by the merchant processor. For instance, they may claim that they never received the product or that the product was not as described. If you find yourself in this situation, it is important to know your rights and how to respond to chargebacks.
A legal professional can help you understand your rights under the Fair Credit Billing Act and other relevant laws. They can also help you develop policies and procedures to reduce the risk of chargebacks, such as requiring signatures for all purchases or offering a hassle-free return policy.
Negotiate Better Terms With Your Merchant Processor
If you are not happy with the terms of your merchant account, such as the fees charged or the payment terms, a legal professional can help you negotiate better terms. They can also help you understand the terms of your merchant agreement and make sure that you are not being taken advantage of.
For instance, some merchant processors charge hidden fees, such as monthly account fees, statement fees, or minimum transaction fees. A legal professional can help you identify these hidden fees and negotiate to have them removed.
On the other hand, if you are being charged excessive fees, a legal professional can help you negotiate a lower rate. They can also help you understand the fees that are common in your industry and make sure that you are not being overcharged.
No matter what your business is, it is important to consult with a legal professional when it comes to using credit cards. This is because many laws and regulations need to be considered, and by working with a legal professional you can be sure that you are following all the necessary rules and taking full advantage of the benefits that come with using credit cards for business purposes.