As we wrote about last month we have seen more races cancelled in the past year by operators who have had financial difficulties or just decided it was easier to walk away from the responsibility of the race. We also continue to guard against fraudsters who want to use our site illegally. Without proper safeguards these kinds of risks could take a toll on the financial health of RunSignup.
Since becoming a payment facilitator a few years ago RunSignup has applied Know Your Customer rules and underwriting standards to each new payment account that has been set up with us, similar to setting up a bank account since there is the electronic movement of money. Those standards include things like getting the correct legal name and tax ID number for the entity that owns the race and getting information from the individual setting up the payment account. After the account is set up and begins processing with us we may come back at various times and ask for additional underwriting information. As a payment facilitator we have committed to the card brands and our back end credit card processing companies that we would adhere to a uniform standard of underwriting for all accounts that is progressive in nature and is based upon the amount of the transactions that are processed for that account. Plus it just makes good business sense to understand who we are doing business with and to periodically assess any business risks. We often hear that other registration companies don’t do this level of diligence. We understand this may be easier in the long term but will not protect the financial health of the registration company and their ability to protect your money.
As we assess the risk in the market and note that some other registration companies have had financial difficulties we are ramping up our risk management and underwriting procedures. We are committed to maintaining the financial health of RunSignup for the benefit of our customers and their races. Accordingly we may be more insistent in receiving updated underwriting information from you than we have in the past and the reviews may be more frequent. If we are unable to get information we need to complete our reviews we may discontinue payments until we are able to complete the review. We also may require you to include a holdback or increase a holdback for your races. In some circumstances, for those with a history of financial issues, we may not be able to do business with you. We are taking these steps to insure that RunSignup remains financially healthy and that there is no risk in our ability to manage your registration process.
We are also preparing for a change in the beneficial ownership rules. As a registered Payment Facilitator we are an extension of the financial institutions that issue and process credit cards and are subject to the rules issued by the Department of the Treasury. The primary change that you will see when setting up a new payment account with us is that we will require information on a “Control Owner” or “Principal” of business and nonprofit entities setting up with us. This is an individual with significant responsibility to control, manage, or direct a legal entity customer, including an executive officer or senior manager (e.g., a Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Managing Member, General Partner, President, Vice President, or Treasurer); or any other individual who regularly performs similar functions. We will require the name, address, date of birth and full social security number for this individual. You can be assured that we will store this information safely and securely. We will no longer allow “Authorized Representatives” or Employees of entities that don’t fit this description to be the Principal on the account. Compliance with this rule is required by May 11, 2018 but we may implement this a few weeks sooner.
We take our responsibility for underwriting new and existing customers seriously. We think it is important to properly manage risk to protect the financial health of RunSignup so that we can fulfill our promise to you of efficiently and safely managing your registration process and your money.