Slamming Definition

Merchant Account Slamming Explained:

What is Slamming? In the credit card processing industry, “slamming” refers to the practice of deceptively signing merchants up for unwanted services by posing as their current merchant account provider. Slamming usually begins with a sales agent making an unsolicited call to a merchant. The agent may provide vague information about his or her employer, saying simply that they are with “merchant services,” “the credit card processor,” “the bank,” “Visa,” or “MasterCard.” Alternatively, the agent might even guess a merchant’s provider correctly and lead a merchant to believe that they are speaking to their current provider.

After successfully misrepresenting themselves, agents will then falsely inform merchants that their credit card equipment is out of date, non-PCI compliant, or incompatible with a new service that is being offered. Unsuspecting merchants often consent to have an agent come out and “reprogram” their credit card terminal. This “reprogramming” is really just setting the terminal up to process through a new company (the agent’s employer), leaving the merchant stuck with two merchant accounts and their associated costs. Merchants in this position are exposed to numerous risks, including extra fees, termination penalties, fraud, and the potential to be placed on the TMF once their original processor finds out about their new account. Many merchant services providers demand exclusivity in their contract terms and will terminate a merchant’s account if they learn that the merchant is processing through another company.

Unfortunately, slamming is a real (though uncommon) hazard for merchants. Merchant account providers claim that one reason they “lock” credit card terminals is to prevent slammers from reprogramming a merchant’s terminal. Merchants can protect themselves from slamming, though, by ensuring that they are dealing with a representative from their own provider at all times. Merchants should understand that it is unlikely that Visa, MasterCard, or their bank will ever contact them about an upgrade for their equipment, and merchants should also insist on seeing proof of an agent’s employer before allowing them to switch out or reprogram equipment. Slamming is a well-known tactic within the industry, and any ethical sales agent should be willing to supply a merchant with the necessary information.

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