In response to recent trends in illegal or brand-damaging activity, Mastercard has updated its Business Risk Assessment and Mitigation (BRAM) program. The changes around Covid-19 scams, celebrity endorsements and electronic nicotine delivery systems(ENDS) were effective 30 June 2020.
Criminals adapt well. The Covid-19 crisis has shown how quickly they are able to invent new scams andre-purpose old ones. As a result, Mastercard has announced that the sale of any goods or services, either through an affiliate marketer or directly from the merchant of record, that purports to test, cure, treat or prevent Covid-19, will be considered a BRAM violation.This is for as long as these goods and services have not been approved for sale by the relevant government or regulatory authorities, according to AN 4175 Update for the Business Risk Assessment and Mitigation Program, Mastercard.
There are two parts to note. Firstly, that pharmaceutical sales, particularly online, are high risk. While the products are heavily regulated, the internet as a sales channel is not. Laws may differ jurisdiction to jurisdiction. Acquirers must ensure that their merchants are selling products that are licensed for sale in both the buyer’s and seller’s country.
Medicines must be genuine (i.e. not counterfeit). They must be dispensed correctly. And the merchants must be licensed to engage in the practice of pharmacy in the countries and sales channels in which they operate.
For the avoidance of doubt, there is currently no known cure for Covid-19. Anti-malaria drug chloroquine has been touted as a possible cure, including by US President Trump. However, when a medicine is licensed, it is for a particular indication, at a particular dosage, route of administration and so on. A medicine may be licensed for the treatment of malaria, but merchants cannot legally sell or dispense it to treat other illnesses.
Secondly, how goods are sold is as important as what goods are sold. If a merchant uses deceptive sales and marketing practices, which violate consumer protection laws or trading standards legislation, transactions for legal goods may become illegal. Regulators have been vigilant in taking unscrupulous merchants to task for Covid-19-related deceptive marketing practices.
Celebrity endorsement of products or services have been around for years. However, acquirers and PSPs should be aware that unscrupulous merchants may trade on this by using celebrity images or testimonials to endorse products without the knowledge or permission of the celebrities themselves.
Mastercard highlights the use of unauthorized celebrity endorsements for health care products and dietary supplements. But the practice is by no means restricted to nutraceuticals. Martin Lewis, a British journalist and founder of the website MoneySavingExpert.com, started legal proceedings against Facebook in 2018 to stop fake ads appearing on the social media site using his name and image without his permission.
Lewis claimed that the fake ads often marketed investment and Bitcoin products and tricked people out of their savings. In early 2019 Lewis dropped his lawsuit after Facebook agreed to launch a scam advertising reporting tool. It also made a £3 million donation to an anti-scam project run by an independent money advice charity.
The marketing and/or sale of any good or service that involves the unauthorized use of a celebrity’s name, image, likeness or other aspect of identity, either through an affiliate marketer or directly from the merchant of record, is now considered a BRAM violation. Acquirers may also be required to provide sufficient documentation to support the authorized use of the celebrity’s identity within the time frame requested.
Electronic nicotine delivery systems (ENDS)
Recent legislation in the US has restricted the sale of ENDS, such as e-cigarettes, vape pens and cartridge refills. Tobacco is included in the BRAM program so acquirers must register on the Mastercard Registration Program (MRP) prior to acquiring transactions in this sector. Acquirers must have appropriate controls in place to ensure their tobacco merchants do not violate any laws or regulations in the jurisdictions where they are active.
Mastercard reminds acquirers of coding requirements for ENDS. Merchants or sub-merchants whose primary business is the sale of ENDS must be assigned the merchant category code 5993 (cigar stores and stands). And the transaction category code T for non-face-to-face sales and R for face-to-face sales.
Gambling regulatory update
Mastercard reminds acquirers that processing internet gambling transactions for unlicensed merchants is expressly prohibited in Portugal, Germany and Lithuania. Acquirers must ensure that any gambling merchants in their portfolio only operate in jurisdictions where their business activities are lawful. Otherwise, this is deemed a BRAM violation.
In the UK, gambling on credit cards has been banned since April 2020. This affects a whole range of merchants as follows:
- Remote Operating Licenses
General Betting (real events)
General Betting (virtual events)
General Betting (limited)
External Lottery Manager
- Non-Remote Operating Licenses
General Betting (limited)
General Betting (standard)
Acquirers should check their portfolio to ensure their merchants are in compliance with the new regulations.
How Web Shield can help
Our system has already been adapted to the changes in the BRAM program and contains guidance regarding the regulatory updates for the MCCs inquestion.