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WRF Blog Update

New Dispute Process for Visa Merchants – April 2018

Back in March, we mentioned that a change to the Visa dispute process was on the horizon. That change has finally taken effect. As of April 13, 2018, Visa moved to a new dispute process called Visa Claims Resolution (VCR). This change was designed to simplify the dispute process and deviates from the existing process in some key areas.

There are five key changes.

  1. The time frame for merchants to respond is shortened from 45 days to 30 days.
  2. Certain invalid chargebacks will be automatically rejected before processing.
  3. All cases will be routed through one of two workflows, Allocations or Collaborations.
  4. The previous 22 reason codes are consolidated into four basic dispute categories.
  5. Merchants will only be allowed to challenge fraud and authorization disputes if they have clear and definitive evidence or “compelling evidence.”

You can read more in-depth about these changes by reviewing Visa’s publication, Dispute Management Guidelines for Visa Merchants.

If you have any questions on how to process your disputes, please contact us.

Are You Aware the VISA Dispute Process is Changing?

Visa: Dispute Resolution Update

Chargebacks are part of a decades-old process that hasn’t changed much since its inception in the mid-70’s. While adequate for its time, the existing system is not flexible enough to handle the volume and complexity of the contemporary payments industry.

As of April 15, 2018, Visa is attempting to streamline and speed up the overall dispute process. Visa’s new process is called VISA Claims Resolution (VCR). Many of these changes will happen behind the scenes. However, there are a few items that may impact you as a business owner.

Currently, the average dispute takes around 46 days to complete while more contentious disputes take over 100 days. The new process is expected to conclude disputes in under 31 days. This will be done by reducing timelines, touch points and processes from both the card issuing and merchant sides of the industry. The notices that are sent to you will continue to have the deadline date clearly posted, so please respond promptly.

Visa will be consolidating 22 dispute reason codes down to just four categories. The information provided to you in each of these four categories will be just as robust as before, although it may require you to take different actions depending on the category of the dispute. The information provided to you will help you understand the reason for the dispute and how to respond. Pay special attention to the required documentation.

Another benefit to the business owner is that Visa will be blocking invalid disputes from entering the dispute system if they don’t meet new data requirements from the issuing side.

As always, it’s important to pay attention to dispute notices that you receive. Provide all the required documentation noted on your dispute notice for that dispute reason. With the new shortened time-frames, reply no later than the deadline posted on your notice.

If you would like to read more detailed information you can find it here: Visa Claims Resolution (VCR)

Do You Know Who’s On the Other End of That Line?

A certain type of scam has resurfaced recently – one that has been around for a long time in different iterations. We’ve blogged about this before, but perhaps it’s time for a reminder. What I refer to is a “fake authorization scam” and it works like this.

The fraud suspect is attempting to purchase a big ticket item or conduct a credit card cash advance in a financial institution. The card is declined and they have an excuse such as “it must be a transaction amount limit” or “a daily limit.”  They pretend to call the number on the back of their credit card or they have you call it. However, unbeknownst to you, the phone number has been changed on the back of this counterfeit card, and it rings to the cell phone of an accomplice of theirs.

Their accomplice is skilled at sounding like they work for the credit card issuer. They use common terms and professional sounding language. They indicate a reason that the transaction was declined, but that funds are available and they will walk you through a manual authorization.

They have you press certain keys on your credit card terminal and, unbeknownst to you once again, they have taken your terminal offline or into training mode. In this mode, any number entered as an approval code will appear as an approval even though the terminal is not communicating with the card issuer to obtain authorization.

The happy “customer” then goes on their way never to be heard from again. Then you receive a chargeback from the credit card issuer for “no valid authorization.” You call your credit card processor and insist that you spoke with the card issuer and they gave you an authorization code that approved on your terminal. Your credit card processor can only see that the card issuer has reported that the authorization code was not valid. Unless a valid code is provided, you’re going to lose the chargeback as the real cardholder wants their money back from this fraudulent transaction on their account.

You thought you were going to have a big sale and instead you’re sitting with a loss. The chargeback process does not seem fair. You did your best to “do it right” and you still got scammed. There are many frustrating things about this type of scam.

There are a few things you can do to help protect your business from this. First, never (and I mean NEVER), accept a customer’s cell phone if they say they’ve contacted their card issuer. Joint with this, do not call the number on the back of their card since it may have been modified. The phone number on the back of a card is for the cardholder only.

In the very rare event that a cardholder needs to contact their card issuer to get special permission to run a larger transaction, they can do so on their own while you, as the merchant, run the transaction the way it was intended. That is to insert (if it’s a chip card) or swipe the magnetic strip and get an approval.

If the card declines, it’s a sign that something is wrong. Are there other signs present that this customer may not be who they pertain to be? Was the sale too easy? Are they “buying” rather than “shopping?” Is the merchandise something they can easily resell on ebay?

We recommend asking for another form of payment at this point. If, at your discretion, you choose to attempt to run the card again, you’re increasing the chances of not getting paid for the transaction. We do not want this to happen which is why we recommend stopping at a first decline and asking for that second form of payment.

Better safe than sorry…

Chargeback Refresher

As part of our recent Innovation Exchange and Open House Event, we created a chargeback quiz to help merchants think about chargebacks and how they impact their business. The quiz wasn’t designed to test what you know or don’t know about chargebacks, but rather to educate you and help you protect your business.

Want to test your knowledge? Take the short quiz click, here which will link you to SurveyMonkey.

During our Event, many participants took the quiz and found that there were several questions that stumped many people. So we thought of taking this as an opportunity to share our knowledge and educate more of our clients about chargebacks.

Once you have taken the quiz, you can click here to find the answers. We have highlighted the correct answers and added narrative for better clarity. Hopefully, this information will help you think about ways to protect your business from chargebacks.

If you have other questions about chargebacks, you can always contact me. Phone number 800 704-7253 ext. 6752 or btjugum@windriverfinancial.com.


Card Brands Making Temporary Change to EMV Fraud Liability Shift


Prior to October 2015, card-present counterfeit fraud liability resided with credit card issuers. In October 2015, when the EMV liability shift took effect, liability shifted to the party that had not enabled chip – the merchant or card issuer. In some cases, merchants have been unable to implement EMV terminals due to EMV software certification delays and are bearing the cost of counterfeit fraud while they wait.  As a result, both Visa and American Express (as of 06/28/2016) have extended temporary modifications to the EMV liability shift.  It’s possible that other payment card brands may follow suit with similar EMV related chargeback modifications in the near future.

The current updates will help alleviate the effect of the liability shift on merchants that have yet to enable EMV acceptance as follows:

  • 10 Chargeback Maximum: limiting chargebacks to 10 counterfeit transactions per payment card account, with issuers assuming liability for all fraudulent transactions on the account thereafter, reinforces the responsibility issuers currently have to detect and act quickly on counterfeit fraud. This change is focused on a small percentage of accounts with a high number of chargebacks and is expected to reduce counterfeit chargeback transactions by 4 percent and counterfeit fraud dollars by 11 percent.  This adjustment will be effective 10/15/2016 – 04/13/2018 for Visa and by the end of 2016 through April 2018 for American Express.

Although American Express has yet to release specific operating details, Visa has indicated that their modifications will be enforced primarily through system blocks which will preclude card issuers from sending chargebacks fitting these parameters.

If you have any questions about chargebacks you can call us or write us and learn from our experts.

This Week’s Question
How much did you spend on fireworks for the Fourth of July?

Last Week’s Question

Will you travel for the 4th of July Holiday?

30% No, staying home

20% Yes, less than 100 miles

50% Yes, traveling more than 100 miles

How Should I Handle a Declined Card?

A quick reminder during this busy holiday season that even if those check-out lines are long, it is important to always follow best practices when accepting cards for payment at your point-of-sale. We have a few reminders that you should be aware of to protect yourself from fraud.

If you receive a “decline” message when processing a customer’s credit card, you should ask for another form of payment. Red Flag: Don’t accept authorization codes from customers even if they indicate they have received the approval after “talking to their bank.” You have no way of validating who they have just called and unfortunately this tactic is often used to defraud merchants. If you received a decline response when running the transaction, the bank that issued the card is not providing an approval for a reason – insufficient funds, past due, lost/stolen card, etc.

Accepting a sale and processing the transaction in an off-line mode should always be an exception and only done in unique circumstances. If a customer tells you that it’s “Ok” to run the offline sale because it “must be some sort of mistake” and they are “sure it is fine with their bank” – don’t believe it. No matter how nice they might be or how large the sale is. If a transaction is processed in offline mode without proper authorization, it will result in a chargeback to your business. Consequently, you may end up losing money and the product you just sold. Most customers have a second form of payment, and if they do not, the safe bet is to just apologize that the card doesn’t seem to be working at the moment and your store’s policy is to not force a declined card.

Making sure every transaction is properly authorized and a signed receipt is completed will help to protect your business from unnecessary chargebacks and fraud. Even during the holiday rush, it is important to follow the appropriate card acceptance process. For any additional questions, please give our friendly relationship managers a call at 1-800-704-7253, Option #4.