Integrity Bankcard Consultants, Inc.

Risk Management Services Offered to Acquirers

Integrity Bankcard Consultants, Inc. (IBC) provides consulting services exclusively to the bankcard industry. Based upon our principals' combined thirty-five plus years of credit card experience, IBC is offering consulting engagements to bankcard acquirers, whether member banks or ISO's (Independent Sales Organization) in the following operational areas:

Merchant Operations and Risk Management Assessments

IBC will review and evaluate risk management practices and develop recommendations to improve operating processes while minimizing the overall risk exposure. Our approach assesses policies, processes, practices, controls and reporting in the areas of merchant approval and credit underwriting, merchant risk management, merchant activity monitoring, suspect activity response, merchant terminations and the investigation, prosecution and recovery of losses.

Merchant Underwriting

A detailed analysis of the credit and fraud risk screening process, and the development of recommendations for improved merchant application review, underwriting and merchant set-up for risk monitoring, including establishment of proper exception parameters. We also can provide independent third party site inspections for most markets nationwide and individual assessments and opinions for high-risk and high-volume merchant applications.

Analysis of the Risk Involved with Merchant Base

A review of individual merchants, such as those that accept mail and/or telephone orders, to identify areas of potential fraud and risk exposure and to recommend improvements in operating processes, verification techniques and detection reporting. A review and implementation of the chargeback department processes to minimize the risk of loss through merchant education, the timely presentation of sales drafts, the full use of all representment rights, and information sharing with the security department.

Merchant Discount Pricing

A focused effort to develop a merchant discount pricing model to increase revenues to the level of risk being assumed for different sizes and types of merchants.

Collections and the Recovery of Losses

An assessment reviewing the processes used for the minimization, recovery and collection of losses. IBC also has worked with law enforcement to have numerous individuals prosecuted for bankcard fraud that has lead to the further recovery of losses.

Security Assessments

Provide Account Information Security Standards Assessments as set forth by VISA

, MasterCard

or other organizations for processing centers, Internet and MO/TO service providers and merchants to protect account and transaction information. IBC can also provide a review and implementation of a human resource policy for members and ISO's, which addresses the appropriate information security considerations for employees, contract and temporary workers.

ISO Service/Provider Risk Standards and Background Investigations

VISA

recently unveiled new Enhanced ISO/Service Provider Risk Standards that set out the minimum standards and registration procedures that members must follow to register new ISO's. IBC can provide the VISA

required financial reviews, on-site ISO reviews and background investigations of ISO's, its principals and employees, including credit history, property deed transfers, suits, liens and judgments, bankruptcy, Dun & Bradstreet Reports, Uniform Commercial Code Filings, state and federal criminal records. These risk standards make sense in today's world and are for the protection of both the card associations and the individual members. For example, in December 2001 a member bank announced that it had suffered a theft of nearly 5 million dollars by one of its ISO's principals, who turned up missing along with the cash. IBC can also review the security controls the ISO has in place including the auditing process, management and exception reporting and cardholder information security practices.

IBC can also provide assistance in the development of the VISA

required annual review process that each member must now establish for controlling ISO/Service Provider Risk.

FTC Audit Prevention Analysis

In February 2002 the FTC took over, in receivership, a major ISO because it allegedly misrepresented that: (1) if merchants purchased their services they would save money each month on their card processing expenses; (2) if merchants were dissatisfied with any services or representations made by the company they could cancel or transfer the service to another card processor at any time with no further obligation; (3) there was no minimum monthly fee for the services offered; and (4) if merchants were charged cancellation fees by prior card processors, the company would reimburse them. The end result was that ISO was forced to sell all of its assets to pay a 23.5 million dollar fine to the FTC.

IBC provides a review of an acquirer's operation with our FTC Audit Prevention Analysis. The Analysis focuses on minimizing the regulatory risk for the acquirer, while complying with all VISA

/MasterCard

and FDIC/OCC rules and regulations and by practicing prudent risk avoidance management, of being targeted by FTC or other regulators. The analysis focuses on merchant processing agreements and other sales documents, sales procedures and back room processes and safeguards that can keep regulators from targeting your operation. The FTC will look to the steps that a company is taking to comply with its guidelines, and the presence of this type of "Third Party Audit" and follow up can go a long way in preventing an isolated instance from turning into an enforcement action.

Summary of Services Provided to Merchants

Our experience working for and with processors and banks allows our expertise to be of particular benefit to merchants in the following areas:

MATCH Report (f/k/a Terminated Merchant File) review, removal and/or merchant placement.
Reserve account reconciliation and negotiation with processors and banks.
Review and reconciliation of card association fines including negotiation with processors and banks.
Resolve chargeback problems and establishment of chargeback processes to minimize impact of chargebacks to merchants.
Develop chargeback processes to comply with the new Visa RED dispute resolution rules and regulations.
Merchant account placement, including high-risk accounts.
Merchant agreement and ISO agreement analysis and review.
Merchant education seminars and training.
Expert testimony and Mediation services.