I got a call this last week about An e commerce business owner reaches out requesting standard processing rates for their new “organic health and wellness shop.” The business seems legit, the volume looks solid, and you’re already calculating the residual income in your head.
Then you do a quick sweep of their online storefront and spot it: tucked away in a side category are products like CBD drops, Delta-8 gummies, or high-risk dietary supplements.
You know for a fact that your standard retail/e-commerce sponsor banks strictly prohibit these product categories under low-risk merchant accounts.
When you bring it up, the merchant shrugs it off and says: “Look, high-risk processors charge crazy fees and take forever to settle funds. Nobody actually checks those sub-pages anyway. Just submit us as standard retail—if anyone asks, I’ll take those items off the site.”
The Dilemma
You’re dealing with a merchant who wants to play in a regulatory “gray area.” If you push the application through as a standard low-risk account, underwriting might catch it, reject it, or worse—approve it today, only to freeze the merchant’s funds and shut down the account in a couple weeks from now when an audit triggers.
On the flip side, if you insist on placing them with a dedicated high-risk processor, the rates will be higher, the onboarding will take longer, and there’s a high chance the merchant walks away to find another rep who is willing to lie for the business.
What Would You Do?
When a merchant asks you to turn a blind eye to high-risk inventory, which playbook do you run?
- Option A: The Risk Consultant. You hold your ground and educate them on the consequences. You explain that masking high-risk products gets accounts terminated, funds held for 180 days, and the business potentially placed on the MATCH list (TMF). You offer to set them up properly with a dedicated high-risk MID that protects their cash flow, even if the rates are higher.
- Option B: The Selective Onboarding. You tell the merchant: “If you want low-risk rates with our main bank, those specific products cannot exist on this domain at all—period. If you set up a separate website for the high-risk line, we can board the low-risk shop today and find a high-risk solution for the other site later.”
- Option C: The Hard Pass. You recognize that a merchant willing to deceive underwriting is a walking chargeback/compliance headache who will ultimately blame you when their account gets frozen. You politely decline to write the account and walk away to spend time on clean business.
Over to You, WWYD?
How do you handle merchants trying to sneak high-risk products onto low-risk rails?
Drop your strategy in the comments below! Do you pitch the high-risk solution, offer a workaround, or walk away completely?
Happy Selling,
David
