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Kirkpatrick Statement on H.R. 3261, the "Stop Online Piracy Act" 2011-11-16

Kirkpatrick Statement on H.R. 3261, the "Stop Online Piracy Act" 2011-11-16

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Published by Paul Jackson
Linda Kirkpatrick
Group Head
Customer Performance Integrity
MasterCard
Linda Kirkpatrick
Group Head
Customer Performance Integrity
MasterCard

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Published by: Paul Jackson on Nov 16, 2011
Copyright:Attribution Non-commercial

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11/16/2011

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H
EARING ON
H.R.
 
3261,
 
T
HE
“S
TOP
O
NLINE
P
IRACY
A
CT
T
ESTIMONY OF
L
INDA
K
IRKPATRICK
 G
ROUP
H
EAD
,
 
F
RANCHISE
D
EVELOPMENT
 / 
 
C
USTOMER
P
ERFORMANCE
I
NTEGRITY
 M
ASTER
C
ARD
W
ORLDWIDE
 B
EFORE THE
C
OMMITTEE ON THE
J
UDICIARY
 U.S.
 
H
OUSE OF
R
EPRESENTATIVES
 N
OVEMBER
16,
 
2011
Good morning, Chairman Smith, Ranking Member Conyers, and Members of theCommittee. My name is Linda Kirkpatrick, and I am Group Head, FranchiseDevelopment/Customer Performance Integrity, at MasterCard Worldwide (“MasterCard”) inPurchase, New York. It is my pleasure to appear before you today to discuss the important issueof combating the sale of infringing goods over the Internet. We commend the Committee on itsattention to this issue, including the hard work that has gone into drafting H.R. 3261, the StopOnline Piracy Act. We greatly appreciate the opportunity to be here today and we look forwardto working with you to combat this critical issue going forward.MasterCard’s rules and requirements prohibit the use of its system for any illegalpurposes, including for the sale of products or services that infringe on intellectual propertyrights, and we are vigilant in our efforts to prohibit the sale of infringing products or services andother illegal or reputation-damaging products or services through the MasterCard system.MasterCard recognizes the important role it plays in combating this issue and has taken a numberof steps that demonstrate its commitment to this important cause. These efforts, which arediscussed in greater detail below, include: (i) publishing the MasterCard Anti-Piracy Policy,which sets out the specific process by which MasterCard and rights holders can work together toidentify and prevent the sale of infringing products or services; (ii) working with the WhiteHouse’s Office of the U.S. Intellectual Property Enforcement Coordinator in the development of 
 
2industry best practices to address copyright infringement and the sale of counterfeit productsover the Internet; (iii) the implementation and maintenance of MasterCard’s Business Risk Assessment and Mitigation (“BRAM”) Program to protect MasterCard against efforts to use theMasterCard system for illegal or brand-damaging activities; and (iv) the development of programs to combat the illicit online sale of pharmaceuticals and the use of the Internet for thesale of child pornography.
 Background on MasterCard 
MasterCard advances global commerce by providing a critical link among more than21,000 financial institutions and millions of businesses, cardholders and merchants worldwidewho use MasterCard’s global payment system to complete MasterCard-branded payment cardtransactions. MasterCard licenses its customers around the world to use the MasterCard servicemarks in connection with those payment card transactions. Importantly, MasterCard neitherissues payment cards to cardholders, nor does it contract with merchants to accept paymentcards. Rather, MasterCard’s financial institution customers issue payment cards to cardholdersand/or contract with merchants to accept the cards. The card-issuing customers are known as“issuers.” Those customers that contract with merchants for card acceptance are commonlycalled “acquirers.” Each cardholder’s account relationship is with the issuer that issued the cardto the cardholder, and each merchant’s acceptance relationship is with its acquirer.
Typical Transaction
 When a MasterCard-branded credit card is used to make a purchase at a brick-and-mortarmerchant, the card typically is swiped through a terminal which reads basic information aboutthe card (
e.g.
, card number and expiration date) from the magnetic stripe on the back of the card.
 
3For Internet-based transactions, this information typically is captured by the merchant byprompting the cardholder to enter the basic information in an electronic form. This informationis linked together with the dollar amount and date of the transaction, as well as basic informationabout the merchant. A message containing the information is then transmitted to the acquirerthat signed up the merchant to accept the card. This is known as the “authorization message.”The acquirer routes the authorization message to MasterCard and MasterCard then routesthe authorization message to the issuer. The issuer checks to make sure that there is sufficientcredit associated with the cardholder’s account to cover the transaction and that the card has notbeen reported as lost or stolen, and then sends to MasterCard a message authorizing thetransaction. MasterCard then routes the message to the acquirer, which transmits the messageback to the merchant to authorize the transaction. In the MasterCard system, an authorizationrequest and response is completed, on average, in 120 milliseconds. A second message, calledthe “clearing message,” generally is sent later in the day to confirm that the transaction has beencompleted and to initiate the movement of funds. The clearing message follows the same routefrom the acquirer to MasterCard, and then back to the issuer. The issuer uses that record to postthe transaction to the cardholder’s account. Once clearing is completed, a daily reconciliation isprovided to each customer to facilitate the exchange of funds between issuers and acquirers. Theprocess of moving funds from issuers to acquirers is known as the “settlement” process.
 MasterCard’s Efforts to Prevent Infringing Online Sales and Other Illicit Online Activities
At MasterCard, we take our responsibility as a corporate citizen very seriously.MasterCard has a long history of working with law enforcement, private stakeholders, itsIn General

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