MasterCard issues new regulations on Internet gambling

Monday, July 12, 1999 | 11:07 a.m.

MasterCard International is establishing rules to make Internet gamblers more accountable for their debts.

The Purchase, N.Y.-based credit card company issued a statement Friday announcing the new rules as part of a proposed settlement in a lawsuit filed by a California woman.

The woman, Cynthia Haines, used her MasterCard credit card to run up $70,000 in Internet gambling debts. Haines then sued MasterCard and other credit card companies in June 1998, blaming them for not stopping her from gambling from her home in Marin County, where gambling is restricted.

Internet gambling industry leaders are welcoming the rules, which are similar to those offered by Visa, another credit card company.

MasterCard, which has nearly 700 million cards under four brand names in circulation, said the new rules will include:

A requirement that Internet casino merchants, as a condition to having a MasterCard merchant account, post a notice on their World Wide Web sites. The notice must state that Internet gambling may be illegal in some jurisdictions, including California, and that consumers should determine if Internet gambling is illegal in their locations.

A requirement that Internet casino merchants ask prospective gamblers to identify the state or foreign country where they are located and maintain a record of their responses.

A provision for card issuers like banks to receive notice of Internet gambling transactions. New operational rules will require transactions to be coded to indicate the nature of the transaction. Some banks now can't tell when their customers are using their MasterCard to gamble on the Internet.

"For a number of months, MasterCard has been evaluating how best to serve the interest of its cardholders and member financial institutions and to address differing and evolving legal perspectives around the world related to Internet gambling," MasterCard said in a prepared statement. "MasterCard believes it has developed the correct approach."

Charles Crawford, treasurer of the Interactive Gaming Council and an expert in the association's e-commerce policy, said the Internet gambling industry favors the new policies because they will help lead to regulation of the industry.

Crawford said the policies are similar to those enacted by Visa about a year ago. Because Visa policies already address posting of notices on sites, location identities and coding of transactions, the online gambling industry already is familiar with the policies, Crawford said.

"We're pleased overall with the settlement," Crawford said. "It's clear that MasterCard is taking a position that the card holder should be more responsible. We've found that the majority of consumers are responsible with all their credit card transactions."