Aside from being a taboo subject, there are other reasons why adult businesses are classified as high risk for payment processing.  One of the main reasons is in the form of memberships.  Most sites will require a monthly membership to view or access their websites.  A lot of sites will do this by offering a free trial, with the fine print reading that the credit card who’s information was entered will begin being charged monthly after the expressed trial period is over. 

Customers either knowingly or unknowingly continue their membership.  For customers who legitimately do not know of this membership, they will generally notice it when the first payment gets charged.  There are people who do not check their card statements, and it could go unnoticed for months.  By the time this customer does notice, they cannot remember the site, or have no contact information on how to cancel this membership.  (For reference it is usually available from your bank.)  The easiest way out is to call the card being charged and dispute the membership agreement.  The adult site has no signature on file, therefore a chargeback gets created, and the customer receives their money back.  If they look up the information on how to cancel the membership, they will only not be charged for future months.  This does not mean a dispute cannot be filed.

Another high risk company which falls under this category is the operation of a ‘phone sex’ company.  When someone calls up and gets charged $.99 for the first minute, and the fine print states $5.99 for each additional minute, they may be taken off guard when the bill arrives.  While be caught up in the moment someone may not care how much money they are being charged, but once the conversation and momentum have ended, the first thought is, “What did I do?”  The bill arrives, and right away it gets disputed, either it wasn’t them on the phone, the call didn’t last that long, or they were charged an excessive amount.  I believe the most common form of “friendly fraud” is blaming a family member.  Even though this is a lie, the customer says they don’t want to press charges because they know the person, they just don’t want to get charged for it.  Typically blamed is a teen-age son, ‘who will definitely be reprimanded, but the charges should be refunded’.

There are times where it is the teenage son, and out of fear of being caught makes up an outlandish story of fraud so that he does not get caught.  Typically, ‘it was a friend,’ etc.  There are high risk merchant account providers who are very much aware of these trends, and can help prevent them.  A credit card company will side with their customer usually, resulting in a chargeback.  When a certain type of company cannot avoid a higher probability of fraud or chargebacks, they become high risk.  Any high risk company should have the experience of a high risk merchant provider to help them.