Legal and Compliance Tips for High-Risk Merchants

High-risk merchants operate in a world full of opportunity, but also face a minefield of regulatory hurdles, chargeback threats, and strict scrutiny from banks and payment processors. Whether you're in industries like CBD, adult entertainment, subscription services, or nutraceuticals, navigating compliance isn't just smart, it's essential for survival and growth.

Helping high-risk businesses secure sustainable, fully-compliant payment processing solutions is what we do best. We'll break down the key legal and compliance strategies you need to protect your business, build trust with banks and processors, and scale without fear.

Why Legal Compliance Is Mission-Critical for High-Risk Merchants

High-risk businesses are under more intense scrutiny than traditional merchants. That's because of elevated fraud rates, high chargeback volumes, industry regulations, or reputational concerns.

Without proper legal and compliance frameworks, you risk account termination, fund holds, fines, or worse, getting blacklisted by banks. But here's the good news: when done right, compliance becomes a competitive edge that builds trust and opens access to better banking and processing terms.

What Makes a Business "High-Risk"?

Understanding why your business is classified as high-risk is the first step to managing compliance effectively.

You might be labeled high-risk due to:

• Industry category (e.g., CBD, adult, gambling, travel, coaching, forex, etc.)
• Recurring billing models or subscriptions
• Chargeback rates higher than 1%
• Selling in international markets
• Ticket sizes over $500
• New or no processing history
• Past issues with payment providers

This label impacts everything from your merchant account application to the compliance standards you must meet. That's why working with an expert provider like 2Accept is so important, we specialize in helping high-risk merchants find reliable, compliant solutions.

Legal and Compliance Tips That Protect and Grow Your Business

Let's dive into actionable strategies tailored to high-risk merchants.

Know Your Industry's Regulatory Landscape

Each high-risk industry is governed by different regulations, often across multiple jurisdictions. For example:

• CBD/Hemp: Subject to FDA regulations, local state laws, and bank card brand rules (like Visa and Mastercard)
• Nutraceuticals: Require proper labeling, disclaimers, and must avoid making unsubstantiated health claims
• Adult Content: Must comply with age verification laws and international content laws
• Coaching and Biz-Op Offers: Subject to FTC scrutiny for income claims and refund policies

Tip: Stay updated with your country's laws and any new card network requirements (like Visa's GBPP or Mastercard's BRAM programs).

Maintain a Transparent and Compliant Website

Your website is the first place acquirers, underwriters, and regulators look to assess risk.

A compliant website should include:

• Clear refund and cancellation policies
• Terms & Conditions and Privacy Policy
• Shipping & Returns info (for physical products)
• Disclaimers where needed (especially for health-related products)
• Accurate product descriptions and pricing
• Secure checkout with SSL

Use Accurate and Legal Marketing Practices

One of the biggest red flags for regulators and processors is misleading or aggressive marketing. This includes:

• False scarcity ("Only 2 left!" when it's not true)
• Unverified health or financial claims
• Fake testimonials or endorsements
• Hidden upsells or negative option billing (auto-renewal without clear consent)

Solution: Ensure your ads, email copy, and landing pages are compliant with FTC guidelines, and be upfront about terms, pricing, and results.

Implement Strong Chargeback Management Systems

High chargebacks are a fast track to account termination. Keep your chargeback rate below 1% (ideally under 0.65%) by:

• Using clear descriptors so customers recognize charges
• Providing real-time order updates and receipts
• Offering responsive customer service
• Utilizing chargeback alerts (like Ethoca or Verifi)
• Having a clear refund policy and honoring it promptly

Know Your KYC and AML Responsibilities

Payment providers, especially in high-risk industries, are required to verify your identity and business practices under Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations.

Be prepared to submit:

• Valid government-issued ID
• Proof of address
• Corporate documents (e.g., Articles of Incorporation)
• Processing history
• Bank statements

Pro Tip: Be proactive. Keeping these documents organized and ready speeds up your application with 2Accept's underwriting team.

Choose the Right Merchant Account Partner

Not all processors understand high-risk industries. Choosing a provider like 2Accept ensures you're working with a team that:

• Specializes in high-risk sectors
• Offers international and offshore solutions
• Understands the legal requirements of your industry
• Provides ongoing compliance support

Plus, 2Accept offers access to multiple acquiring banks, helping you diversify and reduce the risk of sudden account shutdowns.

Understand Card Brand Compliance Programs

Visa and Mastercard have their risk monitoring programs that penalize merchants for excessive chargebacks, fraud, or policy violations.

For example:

• Visa's GBPP (Global Brand Protection Program)
• Mastercard's BRAM (Business Risk Assessment and Mitigation)

Falling into these programs could result in:

• Heavy fines
• Account restrictions
• Being blacklisted from major processors

Tip: Stay below the thresholds and regularly monitor your monthly dispute and fraud volumes.

Secure PCI Compliance

As a merchant accepting card payments, PCI DSS (Payment Card Industry Data Security Standards) compliance is non-negotiable.

Steps to stay PCI compliant:

• Use secure, tokenized payment gateways
• Perform regular security scans
• Maintain secure storage (or avoid storing) cardholder data
• Complete annual SAQ (Self-Assessment Questionnaire)

2Accept works only with fully PCI-compliant solutions, protecting your customers and your business reputation.

Protect Your Business with Legal Counsel

While not every high-risk business needs a full-time legal team, it's worth consulting an attorney who specializes in e-commerce law, fintech, or your specific industry. They can help you:

• Review compliance with advertising and privacy laws
• Draft airtight contracts and refund policies
• Navigate disputes and chargebacks legally
• Understand local, state, and international laws (especially for cross-border sellers)

Have a Disaster Recovery Plan

High-risk merchants face a real possibility of sudden shutdowns, account freezes, or provider changes. Prepare by:

• Having a backup processor (2Accept can help)
• Storing transaction data securely
• Using CRM tools to manage customer communication during outages
• Setting up alerts for chargeback spikes or account changes

Resilience is part of compliance; staying prepared helps you adapt quickly and protect your revenue.

Frequently Asked Questions

What is a high-risk merchant account, and how is it different from a regular one?

A high-risk merchant account is tailored for businesses that face elevated fraud or chargeback risks. Unlike standard accounts, they come with stricter underwriting, higher fees, rolling reserves, and additional compliance checks. 2Accept specializes in helping these businesses get approved and stay compliant.

How long does it take to get a high-risk merchant account with 2Accept?

Typically, 2 business days from the time you provide the necessary documentation and whether your website is compliant. Our onboarding team helps you every step of the way.

Can I get a merchant account if I've been shut down before?

Yes, but you'll need to show that you've fixed past compliance issues. 2Accept works with merchants who've had previous challenges and helps them build a solid, compliant foundation for the future.

What happens if I exceed chargeback thresholds?

Your processor may place holds on your funds, increase fees, or terminate your account. Visa and Mastercard may also flag your business. That's why chargeback prevention tools and monitoring are essential.

Do I need to be PCI compliant if I use a hosted checkout page?

Yes, though your PCI burden is reduced. You still need to complete an SAQ (Self-Assessment Questionnaire) and ensure your payment provider is also PCI compliant. 2Accept ensures that all its gateways meet PCI standards.

Ready to Build a Compliant, Scalable High-Risk Business?

Operating in a high-risk industry doesn't have to mean sleepless nights or unpredictable shutdowns. With the right legal and compliance strategies and a dedicated payment partner like 2Accept, you can thrive while staying ahead of regulations. At 2Accept, we don't just get you approved, we help you stay approved with tailored support, expert guidance, and scalable processing solutions built for your business. Take the next step toward reliable, fully-compliant payment processing. Contact 2Accept today and protect your business while you grow.