Hi,

I was hoping someone could clear a few things up for me.

(1) I heard that if you get more than 15 chargebacks per month regardless of what your volume and chargeback percentage is, the bank could put you into the Mastercard monitoring program. Is that true?

(2) I know that for a third party processor (IPSP), each sub-merchant under them if adult (high risk) must pay a $750 registration fee to Visa USA but Mastercard charges nothing. However, If you are adult and get your own merchant account, you must pay Mastercard $1000 for registration. This hardly seems fair. Is it true?

(3) For adult high risk, Visa has a 1% threshold for chargebacks if you have your own merchant account at any number of chargebacks, right? I also heard that is you process under an IPSP, you are not subject to the 1% rule unless you have over 100 chargebacks per month. True?

Thanks

(1) I heard that if you get more than 15 chargebacks per month regardless of what your volume and chargeback percentage is, the bank could put you into the Mastercard monitoring program. Is that true?

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This is true/and not true, it will always depends on the volume you have, but then again, if you have to many chargebacks your processor will stop dealing with you.


(2) I know that for a third party processor (IPSP), each sub-merchant under them if adult (high risk) must pay a $750 registration fee to Visa USA but Mastercard charges nothing. However, If you are adult and get your own merchant account, you must pay Mastercard $1000 for registration. This hardly seems fair. Is it true?
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It depends on where your business is resident, some Merchant Account providers don't charge you so much for an Adult Merchant Account.


(3) For adult high risk, Visa has a 1% threshold for chargebacks if you have your own merchant account at any number of
chargebacks, right?

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Yes thats correct, but again, depends where your business is located, some places you can have up to 1,5% chargebacks.



I also heard that is you process under an IPSP, you are not subject to the 1% rule unless you have over 100 chargebacks per month. True?

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Again, I think your processor will stop dealing with you or decrease the processing rate.

Actually if you get a merchant account / third party thru some processors that are not based in the United States, you do not have to pay that registration fee. That registration fee is only for North American Banks.

However, most adult processors charge a higher set-up costs as well to help defray people from just signing up. Adult processing is very high risk since a lot of it is recurring billing. Since so many companies were getting dumped because of their high percentages in chargebacks, and then just creating a brand new company, Visa / Mastercard had to come up with a plan to hopefully stop it.

It is really short notice but Internext is this week in Vegas. If you get the time, you shoud stop by.

Hi webhoster

(1) volume ALWAYS matters, its also helpful to use a processor that gives individual attention to its clients. When you have a good relationship with your rep, they should alert you to possible problems and work WITH you to lower the cb numbers before it gets out of hand.
There really are ways to eliminate high cb numbers, even in adult.

(2) the V/MC fees are for US companies .. they are Visa US regulations. If you reside elsewhere or obtain an offshore merchant account the fees are indeed different as are requirements.
Some US banks actually charge $2500 for adult merchant accounts.

(3) 1-1.5% depending on location.
I also heard that is you process under an IPSP, you are not subject to the 1% rule unless you have over 100 chargebacks per month. True?
No, not true - again it depends on volume and ratios. Every adult vendor must deal with cb rations no matter what type of processing they use.

Hope this helps :)

Hi,

Thanks for the posts but my questions have nothing to do with the service of our vendors or the bank itself. I am strictly asking these questions from a Visa/Mastercard rules perspective. I do already know that the reg fees are for US only.

Do any of you guys know the rules I am asking about above?

Thanks

p.s. What is Internext?

It is still up to the processor to put you on the TMF list. They are the ones to actually do it. Once there, it is still possible to get a merchant ccount, albeti very difficult. The current processor would want to know what happened, etc.

Internext is the adult webmaster convention.

Webhoster2004, the 15 chargebacks/month that you are referring to would be the MasterCard Chargeback Monitoring program threshold.

It mandates a minimum of at least 15 chargebacks plus either 1% by # or 2.5% by volume in order to trigger their high risk monitoring program through the Member Bank whose BIN the merchant in question is held under.

The 1% threshold that you often hear about is a Visa requirement with an additional stipulation of 100 chargebacks & 100 interchange transactions in a given month along with some other criteria.

However, keep in mind that while these are the U.S. regs & requirements that will trigger enrollment in the high risk monitoring program - most merchant processors will cut off an account prior to that happening.

No merchant processor ever wants one of their merchants to be placed on the high risk monitoring program as this can lead to expensive audits, penalty fines from $10,000+ and a lot of undue headache.

So as a good rule of thumb, if you keep your overall chargebacks < 1% you are doing well and out of "harm's way" with virtually all merchant processors.

And as mentioned earlier in this thread, if you can work with a merchant processor who can give you real-time stats on your chargebacks and who analyzes your trends and helps you minimize chargebacks - that is a definite plus.

Since there seem to be so many VERY knowledgeable and experienced folks here on the subject of chargebacks (some whose names I have seen on my forums - cdgcommerce :) !), I thought I would ask about my very first "quality not as expected" chargeback (mind you, this was as seasonal item they attempted to return AFTER the holiday and AFTER saying it was the greatest thing ever BEFORE the holiday...)

While I have been reading and reading and reading (still WAITING for all the documentation - the money was taken from my account three days ago, but I am STILL waiting for the documentation letter from my merchant account holder), I seem to be getting two things strongly:

1. Visa/MC tends to side with the customer no matter how much documentation I have to support my case.

2. Sometimes turning the customer over to a collection agency during the process of rebuttal can sometimes help to pursuade a customer to drop it (or at the very least, teach them a valuable lesson on their credit!!)

Would you say this is the case? What can I do to bolster my rebuttal? This was an Ebay auction, credit card info was sent by the customer through Andale, it was processed online through our merchant account, so there is no signature. I have:

1. Proof of delivery through UPS and tracking.
2. The customer reported two pieces broken during shipment (I have that email). I have tracking and delivery proof for the replacement pieces - sent 3-day select mail at our expense so they'd have the pieces in time.
3. Customer called to say thanks for sending the replacements and that they were happy (no proof since it was a phone call)
4. Customer emailed to complain about quality of product AFTER Halloween (this was an animatronic prop) and seven days after receipt of the original item.

Am I screwed on the rebuttal? What about a good collection agency? Anyone have one they'd recommend?

Thanks in advance for any help. This chargeback has really ruined my week, though I knew it could be a possibility and the price of doing business sometimes....

Rene'

Welcome to the forums barbiegal!

As far as collection agencies, well you have some problems there. Some will buy the chargeback from you for a few cents on the dollar. This way, when that company finally gets the person on the phone, that collection company can get an amount of money from them that they want. That way, the collection company will not have to be going back & forth, thus potentially losing the consumer

It is absolutely possible to win chargeback rebuttals, Rene, and I see it happen successfully on a daily basis with many merchants.

If you have proof of delivery along with an AVS match (AVS + CVV is even better) and can forward that documentation along with the information from the cardholder expressing their satisfaction with it initially - I would say that it is definitely worth the effort to try to perform a rebuttal on that and we see merchants win those frequently.

That being said, not every rebuttal will be successful. The ones that nearly impossible to beat are the fraudulent order types where the cardholder's account was stolen and subsequently closed with all of the unauthorized sales charged back.

You are also correct in that the rules do favor the issuers/cardholders in many ways... especially in the Card Not Present realm. The Cardholder Authentication programs now offered by Visa and MasterCard are a step in the right direction and over time I'm hopeful the rules will find a happy medium at some point.

But in the mean time, I am definitely an advocate of going to the mattress with rebuttals on any chargeback that isn't outright fraud-originated.

Following that, your only other option would be collections and my philosophy on that is that at minimum - you may end up dissuading a customer from abusing their credit card privileges in the future even if you don't succeed in collecting back the full amount that you lost.

Best of luck with this issue!

Thank you both for the welcome and for the great advice!

Cdgcommerce - I have been reading quite a bit about the AVS code being important. Whenever I take a phone order, I do get the code and whenever they purchase through the web site, the AVS is required; however, there is no place on Andale (which is where I usually send my Ebay auction customers) for the code, so I normally don't worry about it. I'm actually surprised Andale DOESN'T require it, and I think I will check into why they don't.

But my question for this situation is this - I would understand the AVS code being a much bigger issue if the customer was claiming they never ordered the item or the card was stolen, etc., but (I finally received the paperwork!) the customer is simply claiming it was defective. She included all the emails admitting to making the purchase, paying for it with her credit card (she emailed me right after to tell me she had sent the CC info), etc. Does the AVS play as big of a part in a case such as this?

I was dreading what she might have said in her chargeback evidence, but it's really quite pathetic. She actually included more evidence to support my case than she did her own! Once I told her we wouldn't accept Halloween merchandise back after the holiday (especially since she'd already claimed she was satisfied!), about three weeks later, she sent it back anyway. We happened to be putting out boxes for UPS to pick up when the return arrived, and we recognized the name. We handed the packages right back to the driver and said we were refusing them. I discovered on her chargeback that she complained to the CC company the same day she returned the package, so she wasn't even aware at that point that they would be coming back to her. Apparently the CC is still under the impression that she returned the item and that we have it. I was hoping to include the evidence that we refused her return as part of our rebuttal, but I didn't have any evidence since she initiated the return and had the tracking #'s. Well, lo and behold, she included those tracking #'s in her complaint! So I went in and printed the tracking info to show where we refused the packages and they were returned to the sender. Thanks, customer! LOL!

I just wish I could find some example letters that have "saved the day" in the past. I'm trying to keep it concise but at the same time cover all my evidence. It seems there is no reason to go on and on about the quality of the product. I did a list of "facts" in date of order of the series of events, along with enclosing proof of these facts. I certainly hope it will be enough. We are not a huge operation, and $801.00 is a big chunk of money out of our account. We racked up a lovely $140.00 in insufficient funds fees because the chargeback came through and emptied our account before we realized what had happened. Of course, the $801.00 came out on Monday and we didn't get the paperwork informing us of the chargeback until Friday - I think that is COMPLETELY unfair!!

Ah well, sorry to ramble. We have been doing business a long time, but this is new for us. If there are any high points of info you think I should give to make my case stronger, I sure would appreciate it.

Again, thank you both!

Rene'

Most processors also have an online system to help you warn of chargebacks. But buyer's remorse is anoither reason that a lot of chargebacks happen - I would say that that is usually the number 2 or 3, just hard to say since the customer is not going to say they spent too much money or really does not need it. Defective is just easier

Originally posted by coreybryant
Most processors also have an online system to help you warn of chargebacks. But buyer's remorse is anoither reason that a lot of chargebacks happen - I would say that that is usually the number 2 or 3, just hard to say since the customer is not going to say they spent too much money or really does not need it. Defective is just easier

You're quite right about that, Corey, and I know that is EXACTLY what happened here. When the customer called us (she emailed and then called within minutes of each other) to say some of the pieces were cosmetically damaged in shipment, we told her we would send her out replacement pieces via 3-day mail at our expense so she'd have them for Halloween. Her relief was unbelievable! She said she had felt "horrible for spending $800.00" only to find damged pieces, so she was THRILLED that we were a "reputable company" who would send her replacements. That was my first clue she was having BIG TIME buyer's remorse. I only hope I can get that across to our auditor in my rebuttal....

Rene'

Does anybody know if voice verification will help in rebutting chargebacks?

Alan

Thanks for the info everyone

Originally posted by kewlu
Does anybody know if voice verification will help in rebutting chargebacks?

Alan
I do doubt it unfortunately. I mean, I can easily disguise my voice when that call is made. :rolleyes:

Originally posted by kewlu
Does anybody know if voice verification will help in rebutting chargebacks?

Alan

I don't think that you will do much by doing voice verification. But this is my opinion although I might be wrong ... Anybody?

It definitely will help, but not all.

Exactly ... so you cannot be sure you wii get rid of them ...

Voice verification won't really help in processing a chargeback rebuttal as there is no centralized means of cross-verifying a voice print against a central database.

In addition, that kind of data is not passed through in a standard rebuttal transmission. Instead, only documentation and text-based data is typically sent through.

That being said, however, it may be something of a deterrent for a cardholder to dispute a charge if they feel that their voice and information was recorded.

Well, I sent off my rebuttal today. I hope it's enough. I tried to read up on what works and what doesn't. I kept it to two pages and listed my facts in date order, rather than rambling through paragraphs of a letter. I included all the pertinent emails, charge paperwork, etc. I hope it works!

Does anyone know how long it normally takes for the rebuttal to either be denied or the charge reinstated? I see the customer filed the complaint on 11/8/04! I hope it doesn't take that long for the rebuttal....

Rene'

I hope someone can elaborate on how AVS or CVV2 can help rebut the chargeback. Do you put in the rebuttal document you send to the bank that you were given the CVV2 and the correct billing address?

To answer Rene's question, it usually takes a month for a chargeback/rebuttal to be processed. It takes a lot of time per chargeback case just to win a rebuttal but here're some tips:

1. Get time of call, purchase method (online order or over the phone).
2. Get all customer info, cc #, billing address, account name, account #, order date, transaction #, product purchased, and product/service description
3. Get all customer interactions, time of first purchase or if the customer actually called for support
4. Get usage details
5. Get other details like other additional purchases made using the same cc
6. VISA and MC are more lenient with chargebacks on us. AMEX is the worst and Discover is the best. Discover listens to your explanations most of the time. AMEX just gets your money, but good thing they don't charge as much money as VISA and MC. VISA and MC charges a lot. AMEX can get you out of their program after incurring a certain %. Usually is % against overall volume of transactions.
7. Make sure you talk to your bank or processor. Get the info right and get documents and tips from them. Don't rely on the responses made by some of their support reps. It may be incomplete or they can give conflicting info.
8. Stay on top of your billing support calls. Your agents would know if there's an upset customer threatening for a chargeback already. It helps to stay on top of that account. Check the details and refund the charges you have set right away in case it's a stolen card. If the bank sees that you have refunded it already, by the time they can get a letter to you to explain about a chargeback, you just have to indicate you have refunded the charges.

Hope this helps.

jj

HOLY COW!!!! I went in to download my bank transactions for today, and lo and behold, THERE IS THE $801.99 reversed back into my bank account!! I just sent the rebuttal last Wednesday! Could that be possible already???

Is it possible they just gave it back to me while they research the rebuttal, like they remove it when the chargeback is first made?

I'm almost too scared to believe I get to keep it! LOL! Anyone ever win a rebuttal this quickly???

Rene'

Hi Rene,

Quick reversal only happens when the customer calls in to acknowlegde the charge or the bank made a mistake ......

:)

Dan

Well, I have SERIOUS doubts the customer called in, and I don't see how it could be construed that the bank made a mistake when the customer filed for a "defective merchandise" claim.

Really weird!!

Rene'