Merchant Fraud Detection Report

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MATCH=Merchant Account ChangeCIRF=Consolidated Information Reference FilePOS=Point of Sale

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AUDIT PROGRAM Merchant Fraud Detection Report

Group: Operational Risk & Processing Prepared By:Date: October, 2001 Approved By:

Overview: The Merchant Fraud Control Report 006 is a report within the Fraud Containment group that captures all merchants that have broken any of the pre-determined rules in one or more of the report areas.The Fraud Containment Officers are assigned a specific region and must work the corresponding reportsfor that region on a daily basis.

Audit Objectives (AO) Audit Material(s) RequiredTo ensure that: To be obtained prior to the audit:(a) Fraud Containment Officers are fully knowledgeable of the * Company Policies & Procedures - Fraud Company Policies & Procedures regarding the fraud detection Detection Process process; * 5 Watch Merchant files each for Eastern,(b) a thorough investigation was carried out for all files in accordance Central and Western regions (15 total) with the established rules; * 5 Closed Merchant files each for Eastern,(c) fraud files contain the mandatory documentation and information; Central and Western regions (15 total)(d) all systems are concisely memoed throughout the investigation;(e) monitoring is done by the Team Leader and/or Manager on a monthly basis to assess the quality of the investigation and of the files

Audit ProceduresComments Initials

1. Conduct an interview with no less than 2 Fraud Containment Officers , the Team Leader and Manager to assess their knowledge of their daily responsibilities

AO (a)2. Select 5 "Watch" and 5 "Closed" merchant files from each centre (eastern, central & western): (a) Examine the location of the files to determine if they are controlled in a central area of the unit and are accessible to all members of the group: (i) verify that the centres are properly colour-coded as follows: Eastern= Purple; Central=Red; Western=Yellow (ii) verify all files are signed off by management; (iii) ensure all Watch files contain the following: Checklist; Cover Sheet; System Screen Prints; Authorization Logs; Signed ID Letter; Copy of Application Case, Contract, Credit Bureau; Listing of fraud cards and transaction value; CIRF/MATCH prints; Relevant chargeback information; Fraud Awareness Package sent out (iv) ensure all Termination files contain all of the items in (iii), with the addition of: Signed Cancellation Letter (to replace ID Letter); POS Advice (electronic or faxed copies); Branch advised (by phone or fax); Fax table; Bank Account statements/cheques (if applicable) (v) in cases where a merchant is willing to accept any potential chargebacks, ensure there is something in writing from the merchant stipulating the agreement (vi) ensure all screen prints indicate proper memos are placed in all appropriate systems

AO (b)-(d)


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3. Review 5 random write-off entries to ensure proper


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authority was received


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4. Examine any tracking tools that management has and


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ensure a review of work is done on a monthly basis


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AO (e)


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5. Findings Summary


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ProcessMap

#20

The Fraud Containment Officers are assigned a specific region and must work the corresponding reports

* Company Policies & Procedures - Fraud

* 5 Watch Merchant files each for Eastern, Central and Western regions (15 total)* 5 Closed Merchant files each for Eastern, Central and Western regions (15 total)

WP Page No.


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ProcessMap

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ProcessMap

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ProcessMap

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ProcessMap

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ProcessMap

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ProcessMap

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ProcessMap

#20


MRMS=Merchant Risk Management SystemCIRF=Consolidated Information Reference FilePOS=Point of Sale

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AUDIT PROGRAM Process Merchant Fraud Detection MRMS Map

#19

Group: Prepared By: C. MacieriDate: October, 2001 Approved By: C. Simpson

Overview: The Merchant Risk Management System (MRMS) is a system within the Fraud Containment group that captures all merchants that have broken any of the pre-determined rules in one or more of the MRMS queues.The Fraud Containment Officers are assigned a specific region and must work the corresponding queuesfor that region on a daily basis.

Audit Objectives (AO) Audit Material(s) RequiredTo ensure that: To be obtained prior to the audit:(a) Fraud Containment Officers are fully knowledgeable of the * Moneris Policies & Procedures - Fraud Moneris Policies & Procedures regarding the fraud detection Detection Process process; * 5 Watch Merchant files each for Eastern,(b) a thorough investigation was carried out for all files in accordance Central and Western regions (15 total) with the established rules; * 5 Closed Merchant files each for Eastern,(c) fraud files contain the mandatory documentation and information; Central and Western regions (15 total)(d) all systems are concisely memoed throughout the investigation;(e) monitoring is done by the Team Leader and/or Manager on a monthly basis to assess the quality of the investigation and of the files

Audit ProceduresComments Initials

1. Conduct an interview with no less than 2 Fraud Containment Officers , the Team Leader and Manager to assess their knowledge of their daily responsibilities Leader

AO (a)2. Select 5 "Watch" and 5 "Closed" merchant files from each centre (eastern, central & western): (a) Examine the location of the files to determine if they are controlled in a central area of the unit and are accessible to all members of the group: (i) verify that the centres are properly colour-coded ~ All files are properly colour as follows: coded Eastern=Purple; Central =Red; Western=Yellow (ii) verify all files are signed off by management; ~ 7 out of 30 files not signed off (iii) ensure all Watch files contain the following: Checklist; Cover Sheet; System Screen Prints; ~ 7 out of 15 files missing Authorization Logs; Signed ID Letter; Copy of documentation Application Case, Contract, Credit Bureau; Listing of fraud cards and transaction value; CIRFprints; Relevant chargeback information; Fraud Awareness Package sent out (iv) ensure all Termination files contain all of the items in (iii), with the addition of: ~ 3 out of 15 files missing Signed Cancellation Letter (to replace ID Letter); documentation POS Advice (electronic or faxed copies); Branch advised (by phone or fax); Fax table; Bank Account statements/cheques (if applicable) (v) in cases where a merchant is willing to accept any~ No such cases part of sample size potential chargebacks, ensure there is something in writing from the merchant stipulating the agreement (vi) ensure all system screen prints indicate proper ~ All systems memoed accordingly memos are placed accordingly

AO (b)-(d)3. Review 5 random write-off entries to ensure proper

~ All entries properly authorized authority was received4. Examine any tracking tools that management has and ~ Team Leaders review month-end ensure a review of work is done on a monthly basis statistics for all staff

Operational Risk & Processing (MasterCard)

WP Page No.

Refer to WP

#19-1

~ Interviewed Manager and Team

Refer to WP

#19-2

Refer to WP

#19-4

MRMS=Merchant Risk Management SystemCIRF=Consolidated Information Reference FilePOS=Point of Sale

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AO (e)5. Findings Summary

Refer to WP

#19-4

Refer to WP #19-5

Merchant Fraud Detection Report

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