Chargeback Gurus' Audio Blog

The big problem with fraud is that it’s always changing forms. As soon as regulators and consumers get wise to a particular scheme and learn how to prevent it, the fraudsters come up with a new way to steal people’s money. Many forms of fraud involve exploiting the chargeback process, which is why the card networks keep handing down new mandates to get them under control. Next month, new Visa rules will be taking effect to deal with first-party fraud. What is first-party fraud, and what do merchants need to know about the changes Visa is making?

Merchants already know one of the more common forms of first-party fraud, which we usually refer to as “friendly fraud.” In fact, they’re overlapping categories—friendly fraud can sometimes be the result of a genuine misunderstanding on the customer’s part, but first-party fraud is understood to be intentional. The subset of friendly fraud that is committed knowingly—like when a customer regrets a purchase and disputes the charge by falsely claiming they made the purchase by accident, or that their child made the purchase without their permission—would be considered first-party fraud.

Full Text:
https://www.chargebackgurus.com/blog/first-party-fraud

©Chargeback Gurus 2020
Production: Courtney Freeman 
Narration: Sarah Rife

The only effective way to stop true fraud chargebacks is to prevent fraud in the first place, and one of the most often recommended anti-fraud tools is Address Verification Service, or AVS. It works by matching the address provided by the customer against the cardholder’s address on file with the card issuer, where a discrepancy would indicate possible fraud. This can work well as a frontline defense against stolen cards, but it won’t catch every fraudster, and using it too restrictively could block out some legitimate transactions. How should merchants use AVS in their strategy to fight fraud and chargebacks?

Merchants and customers are quite accustomed to various degrees of AVS matching. We’re used to entering our full billing address at the online store, but the gas pump just gets our ZIP code. Who decides how much address needs to be verified? The merchant—although the banks may try to influence things in a “safer” direction with higher processing fees for unverified transactions.

If you’re dealing with a high rate of chargebacks resulting from true fraud, it’s worth taking a look at how your AVS is set up to see if it could be doing a better job of filtering out the fraudsters.

Full Text:
https://www.chargebackgurus.com/blog/avs-address-verification-service

©Chargeback Gurus 2020
Production: Courtney Freeman 
Narration: Phil Claffey

The chargeback process is heavily rule-based, and it can be tempting to believe that if you memorize the rules and follow them carefully, you can avoid any serious chargeback problems. As any eCommerce merchant can tell you, it’s not really that simple. In fact, there exists a special type of “pre-compliance” chargeback that banks can initiate to seek reimbursement from other banks when rule violations cause them financial harm. What should merchants know about these behind-the-scenes chargebacks—and more importantly, do they need to worry about trying to prevent them?

Pre-compliance chargebacks happen under the Visa card network as a way to resolve chargeback-related disputes between participants in the Visa network. When one party believed that another party had violated a Visa rule in the course of handling a dispute, they could file a chargeback under reason code 98 (“other”) to seek redress.

ith the introduction of the Visa Dispute Resolution system and the Visa Resolve Online (VROL) platform, reason code 98 became obsolete—Visa no longer wanted chargebacks filed under a generic catch-all reason code, and made the pre-compliance chargeback process a function of VROL.

Full Text:
https://www.chargebackgurus.com/blog/pre-compliance-chargebacks

©Chargeback Gurus 2020
Production: Courtney Freeman 
Narration: Sarah Rife

 The card networks are the final authority on chargebacks. All of the rules, reason codes, and phases of the chargeback process are designed by the card networks, and when the banks can’t agree on an outcome, the card network is the final arbiter. On the surface level, chargebacks appear largely the same no matter what network you’re dealing with, but each one has different regulations and time limits. To manage your chargebacks effectively, you have to know how to play by each network’s rules. What do merchants need to know about MasterCard chargebacks?

MasterCard and Visa are the two most widely used card networks, and it’s true that their chargeback processes are pretty similar. However, ignoring the differences between card network rules can cause you to miss response deadlines, misinterpret reason codes, and submit the wrong kind of evidence in representment. There’s nothing worse than getting stuck with an avoidable chargeback, so familiarizing yourself with card network rules is an important part of your overall chargeback management strategy.

The card networks update their rules regularly in order to account for the changing landscape of eCommerce and new forms of payment card fraud. The updated guidelines they publish aren’t exactly light bedtime reading, but they’re the best source for a comprehensive overview of the rules and the latest changes.

Full Text:
https://www.chargebackgurus.com/blog/mastercard-chargeback

©Chargeback Gurus 2020
Production: Courtney Freeman 
Narration: Phil Claffey

You know how the old saying goes: give a person a Bitcoin and they might realize some short-term investment gains for a day; teach them how the blockchain works and they’ll understand a technology with a lifetime of potentially useful applications. Something like that, anyway. The real prize of the cryptocurrency boom may well prove to be the concept of the blockchain itself, or as many now prefer to call it, distributed ledger technology. As with any new technology, sorting out the genuinely good ideas from the hype can be difficult. Some companies are promising that DLT could be a solution for excessive chargebacks and friendly fraud, but is this a real answer or just more blockchain boosterism?

To give this question its due consideration, we have to take a few steps back and look at the history of credit card fraud and the payments industry’s attempts to fight it. When the EMV chip was introduced, it struck a major blow to the use of stolen cards in card-present environments, making it much harder for fraudsters to spend other people’s money at retail stores and other brick-and-mortar locations.

Not surprisingly, credit card fraud shifted heavily toward the card-not-present environment: the world of ecommerce. Unable to rely on physical EMV chips to screen out fraudulent transactions, online merchants and consumers were faced with a growing problem of low-risk, high-reward credit card fraud carried out over the internet.

Full Text:
https://www.chargebackgurus.com/blog/can-distributed-ledger-technology-prevent-friendly-fraud

©Chargeback Gurus 2020
Production: Courtney Freeman 
Narration: Sarah Rife

The growing online and global market has seen the rise in credit card disputes, many of which are billed as “friendly fraud” as a result of chargebacks being abused by consumers. Disputes take up a lot of time, resources, and research for merchants, card issuing agencies, banks, and even customers themselves.

The rising number of credit card disputes, also known as chargebacks, along with increasing processing times and costs has prompted Visa to come up with the Visa Claims Resolution (VCR) initiative. This system allows for a more streamlined processing of disputes via the Visa Resolve Online (VROL), Visa’s online service dedicated to dispute resolution. But how does the VROL facilitate faster dispute resolution, and how does this benefit merchants?

What Is Visa Resolve Online?

Before discussing Visa Resolve Online, it’s best to begin with the Visa Claims Resolution initiative to have a better understanding of this newer, more efficient dispute resolution system.

Visa has four known dispute categories: fraud, authorization, processing errors, and consumer disputes. While they cannot be avoided completely, steps can be taken by merchants, acquirers, issuers, and cardholders to reduce them. 

Full Text:
https://www.chargebackgurus.com/blog/visa-resolve-online

©Chargeback Gurus 2020
Production: Courtney Freeman 
Narration: Sarah Rife 

When we talk about how to “fight and win” against chargebacks, what are we really saying? For the most part, what we’re referring to is chargeback representment. This is the part of the dispute process where the merchant has a chance to contest the chargeback and convince the issuing bank to reverse it and give back the disputed funds. It’s called representment because the merchant is “presenting” the charge a second time. Understanding how chargeback represenment fits within the overall dispute process is crucial to fighting back effectively.

To dispute a transaction and obtain a chargeback, cardholders must give their issuing bank a reason why the charge was invalid and they shouldn’t have to pay it. The issuer may ask some questions and try to dissuade cardholders from filing a baseless dispute, but in most cases the cardholder will receive a chargeback if they demand one.

Chargeback representment happens when the merchant does not agree with the cardholder’s claims and does not want to accept the chargeback. Upon receiving notice of the chargeback, they can submit the transaction again, along with evidence that proves its validity. This evidence is first received by the merchant’s acquiring bank, who sends it back upstream to the issuing bank, who makes a decision and notifies the merchant and the cardholder.

Full Text:
https://www.chargebackgurus.com/blog/what-is-chargeback-representment

©Chargeback Gurus 2020
Production: Courtney Freeman 
Narration: Phil Claffey

It’s been a long time since anything had as big an impact on the way we shop as ecommerce. Online shopping has had a tremendous influence on consumer preferences and expectations, and physical retailers have had to make many changes and concessions to keep shoppers walking through their doors.

One such innovation is allowing customers to make a purchase online, but holding it at a retail location for pickup instead of shipping it. This practice is a hit with consumers, but it has created new opportunities for fraudsters. How is the “buy online, pick up in store” trend causing new chargeback headaches for merchants with brick and mortar stores?

Many of the friendly fraud schemes and other common chargeback scenarios we discuss are native to the online ecommerce world and don’t always translate well to the card-present shopping environment, where EMV chips, face to face interactions, signatures, and other tangible artifacts can make it harder for fraudsters and unethical consumers to get away with the exaggerated claims and falsehoods that propel so many card-not-present chargebacks through the dispute process

Full Text:
https://www.chargebackgurus.com/blog/recurring-billing-chargeback

©Chargeback Gurus 2020
Production: Courtney Freeman 
Narration: Sarah Rife

Merchants who deal in the necessities of modern life and other traditional commodities may feel less vulnerable to chargebacks than retailers operating in the wild west of ecommerce. Certainly, there are risks that are reduced when you’re selling straightforward products at physical storefronts. However, merchants should always seek to understand the specific chargeback scenarios that affect their type of business. This October, the chargeback liability for non-EMV transactions at gas stations will shift, putting those merchants at increased risk for chargebacks. Are fuel merchants prepared to make the changes necessary to protect themselves from a dramatic spike in chargebacks once this shift occurs?

EMV-enabled card readers are ubiquitous at brick-and-mortar retail establishments these days, and for good reason. The EMV chip helps to prevent the authorization of transactions made with stolen or cloned credit cards, protecting consumers and reducing fraud in card-present environments. Many gas station pumps, however, still use card readers that work by reading the magnetic stripe on the back of the payment card.

The risk of using non-EMV card readers at gas pumps is compounded by the existence of card skimmers. These are small electronic devices that criminals insert into the card reader itself. When a customer swipes their card at the gas pump, the skimmer reads the card information off of the magnetic stripe and stores it for later retrieval. When the fraudster comes back later to pick up the skimmer, they can use the stored payment card data to create “cloned” credit cards or to place card-not-present transactions over the phone or internet.

Full Text:
https://www.chargebackgurus.com/blog/gas-station-chargebacks

©Chargeback Gurus 2020
Production: Courtney Freeman 
Narration: Phil Claffey

For merchants making their first ventures into the waters of ecommerce, platforms like Shopify can be extraordinarily helpful. By serving as a single source solution for the biggest hurdles that new entrepreneurs face, these providers can be the deciding factor between a business idea becoming reality or not. Unfortunately, chargebacks will find Shopify merchants as surely as they will any other, and Shopify imposes some of their own requirements on the process. What do merchants need to know before they start dealing with chargebacks that come through Shopify?

Easy to set up and use, there are reportedly half a million active Shopify stores on the web, making it the third-biggest online retailer in the United States after Amazon and eBay. One of the roles Shopify can fill for merchants is as their payment gateway. That places them in the middle of all the merchants’ credit card transactions and makes them a key player in disputes and chargebacks.

In fact, Shopify will respond to the issuing bank and submit the merchant’s response in the event of a chargeback. Merchants who use Shopify must understand this and establish procedures to acknowledge and fight chargebacks from within the Shopify framework, as required, in order to stay on top of their disputes and keep chargebacks to a minimum.

Full Text:
https://www.chargebackgurus.com/blog/shopify-chargebacks

©Chargeback Gurus 2020
Production: Courtney Freeman 
Narration: Sarah Rife