Handling Debit Card Chargebacks - prodevmedia.com Debit Card Chargebacks. Learn the rules and...
Transcript of Handling Debit Card Chargebacks - prodevmedia.com Debit Card Chargebacks. Learn the rules and...
Handling Debit Card Chargebacks
Learn the rules and procedures for signature-based transactions.
Diana Kern, AAPSenior Trainer
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Disclaimer:
The following does not constitute legal advice.
The information provided herein may not be applicable in all situations, should not be treated as legal advice, and should not be acted upon without specific legal advice from your counsel based on the facts and circumstances of your institution.
SHAZAM makes no representations or warranties as to the accuracy or completeness of this information.
What we’ll cover:
Define and level-set Issuer’s role; responsibilities Common scenarios & reasons Next steps Related rules and tips
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WHAT IS A CHARGEBACK?
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Relationships Governed
Chargeback Rules•Issuer•Acquirer
Federal Regulations•Issuer•Accountholder
ISSUER INVESTIGATION
• Dispute reason• PIN- or
signature-based?• Card present or
card-not-present (CNP)?• eCommerce
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EXAMPLE QUESTIONS FOR CARDHOLDERS
• Which transaction(s) is/are you disputing?• What is the reason for your dispute?• Do you have your card in your possession?• Did you let someone borrow or use your card?• When did you cancel the transaction(s)?• Did you engage in the transaction(s), or receive any goods or
benefits as a result of it?• Have you attempted to contact the merchant?
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MERCHANT CONTACT REQUIREMENT
If the cardholder engaged in the transaction, it’s not a fraud-related dispute
• Contact merchant prior to chargeback– Via phone, email, in-person, or web site are options– Document the steps taken– Specify how the attempt was made and the result– For example
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PIN-based transactionsGENERAL PROVISIONS
Fraud-related disputes– PIN approved as valid by the issuer– No right of return to acquirer
Non-fraud-related disputes– CB allowed, examples
• Incorrect amount• Duplicate posting
– Subject to representment– Process & rules specific to brand
DISPUTES WHEN PIN AUTHENTICATED
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What documentation is needed?SUPPORT YOUR CASE; RESEARCH
One of these needed for most reason codes– Cardholder letter– Dispute form provided by your processor
Only if applicable– Receipt(s)– Confirmations (emails, faxes, and etc.)– Proof of shipping or return– Any other document that supports your
cardholder’s case
ISSUER RESPONSIBILITIES
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Submit the chargeback request
CONSULT YOUR NETWORK OR PROCESSORFOR SPECIFIC PROCEDURES
Is your procedure to submit on paper or electronically?
Are any forms needed in addition to the required chargeback documentation?
Get confirmation that your submission was received
ISSUER RESPONSIBILITIES
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OVERVIEW OF THE CHARGEBACK CYCLE
Retrieval Request, if needed(issuer)
Chargeback: 45, 60, 90 or 120 days
(issuer)
Representment: 45 days
(acquirer)
Second Chargeback: 45 days(issuer)
Arbitration: 45 days(acquirer)
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OVERVIEW OF THE CHARGEBACK CYCLE
Retrieval Request, if
needed(issuer)
Chargeback: 75 or 120 days
(issuer)
Representment: 45 days
(acquirer)
Pre-Arbitration: 30 days from
representment(issuer)
Arbitration: 60 days from
representment (allowing 30 days
for Pre-Arb)(issuer)
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ENTRY MODES FOR CARD INFORMATION
Point-of-sale (POS) or Primary Account Number (PAN) Entry Mode
• Tells you how the card data was obtained• Contained in the authorization message• Common field values
– ‘01’ Manual key entry– ‘02’ or ‘90’ Magnetic stripe read– ‘05’ or ‘95’ Chip read– ‘07’ Contactless, using chip data rules– ‘91’ Contactless, using magnetic stripe rules– ‘81’ Electronic commerce (MC)
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Card present, attended terminalCARD WITH MAGNETIC STRIPE, NO CHIP
Card swiped Signature obtained or not required by
special merchant program Common POS entry modes
– 02 or 90 = mag stripe read– 01 = key entered
No chargeback rights Internal documentation?
UNAUTHORIZED CARD USE/FRAUD
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Card present, attended terminalCHIP CARD, MAGNETIC STRIPE READ
Relates to October 1, 2015, EMV liability shift Acquirer/merchant liable if has the “lesser technology” Chip POS entry modes include ‘05’ and ‘95’ Example: your chip card + POS entry mode of ‘90’ =
chargeback rights/chip liability shift for counterfeitfraud transactions
Submit chargeback within 120 days Cardholder letter or form supplied by
processor/network– Visa allows issuer “certification”
UNAUTHORIZED CARD USE/FRAUD
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Card-not-present (CNP)HYBRID OR MAGNETIC STRIPE ONLY CARD
Authentication tools such as Address Verification & CVV2/CVC2 helpful, but not foolproof
Merchant’s use of MasterCard Secure Code or Verified by Visa prevents their liability
Submit chargeback within 120 days Cardholder letter or form supplied by
processor/network– Visa allows issuer “certification”
Have an expectation of representment
UNAUTHORIZED CARD USE/FRAUD
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Optional for online merchants to offer, and for issuers to enroll bank identification number (BIN)
Effects chargeback liability when offered by merchant When BIN enrolled, issuer authenticates the cardholder’s password during
authorization; therefore no chargeback rights When BIN not enrolled but merchant offers, also no chargeback rights View transaction data to determine if used
– MasterCard field ‘UCAF’– Visa field ‘CAVV’
3D SECURE: ONLINE AUTHENTICATION
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•Defective merchandise/Not as described•Merchandise or service not received•Canceled services, merchandise or reservation
Reasons include
•Chargeback within 120 days•Does the dispute meet Regulation E definition of error?•Good faith attempt to resolve with merchant required•Representment possible, even likely
Steps to resolution and variables
•Cardholder letter or equivalent form provided by your processor•Proof of good faith attempt
Documentation needed
CARDHOLDER DISSATISFACTION SCENARIOS
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MasterCard has none Visa
– Travel and entertainment merchants $25– AFD transactions $10 applies only to ‘Fraud-Card
Present’ reason– None for other merchant types or reason codes
Limits set by issuer– Consider processor or network fees– Consider MC or Visa fee– Consider soft costs including staff time spent– Commonly set between $25 and $50
MINIMUM CHARGEBACK AMOUNTS
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What happens next?
How long before feedback
is available? How do you get status updates?
What reports are available for
monitoring?
MONITOR CHARGEBACK STATUS
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Re-presentment by merchant– Allowed within 45 days of the chargeback– Supporting data could include
• A card imprint to prove it was present + a signature• Proof that a service wasn’t canceled or merchandise was
delivered• Merchant rebuttal statement
– Monitor communications and reports from your processor to determine next steps
Pre-arbitration/Arbitration Pre-compliance/Compliance Rights
NEXT STEPS
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MasterCardQUICK PAYMENTS SERVICE
Ticket amount $25 or under (US)
SMALL TICKET MERCHANT PROGRAMS
VisaEASY PAYMENT SERVICE
Ticket amount varies by merchant category code
– $25 or under (US)– $50 or under (US)
• Merchant types include fast food, convenience stores, video stores, pharmacies, parking garages, tollways, and more
• Lack of signature doesn’t improve chargeback position
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Using the credit option
Merchant category code (MCC) 5542 $1.00 authorization allows merchant up to
$100 of fuel purchase per transaction No liability shift for chip cards yet Counterfeit chargebacks only for amount
in excess of $100 Lost or stolen chargeback rights regardless
of amount; no signature obtained
AUTOMATED FUEL DISPENSERS
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Zero liability for cardholders
MasterCard’s rules have two basic conditions
– The cardholder exercised care in safeguarding the card from loss or theft
– Upon becoming aware of the loss or theft, the cardholder promptly reported it
Visa has no stated conditions
CARDHOLDER LIABILITY
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IMPORTANT THINGS TO KNOW
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• Status a card HOT any time a cardholder claims unauthorizedtransaction occurred– Required when using certain reason
codes, so make it a habit– Know where to look so can provide that
date if needed later
• Both brands require fraud reporting– Regardless of chargeback outcome– All stakeholders rely on industry statistics
• When possible, get your cardholder’s story in his/her own words
• Have written policies and procedures for dispute handling, and follow them– Easier and more efficient to support when
everyone follows the same instructions– Avoid the appearance of discriminatory
practices
HOW TO LEARN MORE
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• Members-only site for the brand you issue– MasterCard Connect www.mastercardconnect.com– Visa Online www.visaonline.com– Contact the account executive for your brand, or your network or processor to
gain access– Both also offer in-person and web seminars for dispute resolution and many
other topics
• Public site for the brand you issue– https://www.mastercard.us/en-us.html– https://usa.visa.com/
• Ask your processor or network about chargebacks training available to learn their specific procedures
CONTACT INFORMATION
Diana Kern, AAPSenior TrainerSHAZAM, Inc.
6700 Pioneer ParkwayJohnston, IA 50131
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Handling Debit Card Chargebacks
Q & A