Insights

One of the more concerning trends we have seen recently is not chargebacks or difficult underwriting conversations. It is the rise of questionable merchant inquiries.

These are not always traditional fraud attempts involving stolen identities or falsified documents. More often, they are professionally presented businesses that appear legitimate on the surface but share a growing number of characteristics that warrant closer scrutiny.

The challenge is that many ISOs are accepting these leads at face value because they originate from seemingly legitimate web inquiries.

At KORT, we have seen a noticeable increase in these submissions over the past several months. While the industries may differ, the patterns are becoming remarkably similar.

Why This Is Becoming More Common

The rise of AI website builders has dramatically lowered the barrier to creating a convincing online business.

Today, someone can launch a professional-looking website in a matter of hours.

In some cases, the merchant may simply be shopping aggressively for a processor after being declined elsewhere. In more concerning cases, the objective may be outright fraud.

Either way, the risk is being transferred to the ISO and processor.

The Similarities Are Hard to Ignore

While no single factor proves a merchant is fraudulent, we are seeing the same patterns appear repeatedly.

Common examples include:

• Websites registered only days or weeks before submission
• Product pricing that appears unusual or randomly generated (e.g. $34.67, $82.41, $117.23)
• Generic business names that sound legitimate but lack any real market presence
• Website templates, logos, and layouts that look strikingly similar across unrelated businesses
• Payment network logos displayed in unusual locations or presented in a way that feels unnatural
• Little evidence of real customer activity or reviews

Viewed individually, these may seem insignificant. Viewed together, they often tell a different story.

The Lead Source Matters

One of the biggest mistakes ISOs make is assuming that because a lead came through their website, it must be legitimate.

That assumption can create significant problems.

A merchant searching for a processing solution is not necessarily a good or bad merchant. In fact, some of the highest-risk submissions originate from businesses that are desperately looking for a new provider. That does not mean every urgent merchant should be declined. It simply means the qualification process becomes more important.

The source of the lead should never replace the diligence required on the merchant.

Questions Every ISO Should Be Asking

Before submitting a file, it is worth spending a few extra minutes understanding the business.

Questions such as:

1. How long has the business been operating?
2. Why are they looking for a new processor?
3. Does the website accurately reflect the business?
4. Is there evidence of legitimate customer activity?
5. Does the ownership structure make sense?
6. Do the products, pricing, and marketing materials appear authentic?

Simple questions often uncover information that would otherwise surface much later during underwriting.

Why Early Screening Matters

Every suspicious file that enters the underwriting process consumes time and resources.

More importantly, repeated submissions of questionable merchants can impact credibility with underwriting teams.

Experienced ISOs understand that their value is not simply generating leads. It is qualifying those leads before they are submitted. The strongest partners act as the first layer of risk review, not just the first point of contact.

The Practical Reality

Most merchants coming through your website are legitimate businesses looking for a payments partner.

But increasingly, some are not.

At KORT, our teams review thousands of applications across a broad range of industries and risk categories. What we are seeing today is very different from even a few years ago. Fraudulent merchants are becoming more sophisticated and websites are becoming easier to build.

That makes merchant qualification more important than ever. Because the best underwriting decision is often the deal that never gets submitted in the first place.