Dear Members,

Can you please tell me if the merchant is really protected from the chargeback if the client was using a Verified by Visa (or Mastercard Secure Code) protected credit card?

How many days does a person have to make a chargeback if he/she has paid with the Verified by Visa (or Mastercard Secure Code) protected credit card? There were situations when my client was issuing a chargeback soon after the product was delivered to him. I wonder if those systems will protect me as a merchant from such clients?

Thank you in advance for your support.

Arthur

Yes. They do work, and are currently working for many of the largest merchants online.

1) VbV: Offers blanket coverage against all fraudulent chargebacks for all Visa consumer cards domestically and internationally. US merchants using VbV will also receive chargeback blocking on US issued cards.

2) SecureCode: Internationally: Blanket fraudulent chargeback protection regardless of cardholder enrollment. Chargebacks still need to be represented.

Domestically: Only protects on enrolled cardholders.

You can download additional information here:

http://www.cardinalcommerce.com/solutions/verified.htm

It is depends of the merchant account? There are different types of MA. In general you're not protected from chargebacks.

If you are acquired by a certified Visa/MasterCard acquirer you're merchant account will be eligible for the chargeback protection and rate reduction.

CardinalCommerce, thank you for your quick reply! Do you mean that if the product was purchased from the USA merchant by the Verified By Visa card it is impossible to issue a chargeback? If i understood you right it is definately great for a merchant, but who will cover the money loss to a credit card holder if the transaction was fraudlent?

Just to clarify.

The chargeback will still be issued by the cardholder. What Verified by Visa does is shift the liability from the merchant to the cardholder's issuing bank. So if you participate in VbV you are no longer liable for fraud on all Visa consumer cards regardless of whether they are enrolled in the program or not.

I've attached a PDF outlining the programs to this post. Most of you will find this helpful.

Mods,

Please remove if it violates TOS. There are so many questions around these programs it would help everyone to just read this.

So i wont loose money in case there is a fraudlent transaction and the issuing bank will cover the loss for their credit card holder? I heard that many banks are using a very dodgy technique issuing a chargeback with code 30 (Service not rendered). I think this technique will not work for those merchants that sell tangible goods and can provide the proof of product delivery, but how do internet merchants who sell intangible goods (including me) can solve that problem?

We have several thousand digital download merchants using VbV/MCSC. I don't know how they are exactly combating that, but I know it has to do with proof of download. I'll get back to this thread after I talk to some of our larger partners.

It will be great if you could find any information concerning this important issue. Thank you in advance for your help!

VBV / MSC will only protect certain merchants against certain chargeback codes. If it is services not rendered, VBV / MSC cannot protect the merchant. No matter what a merchant does, there will be ways around it to protect the consumer.

Check out this post (http://www.webhostingtalk.com/showthread.php?s=&postid=4992269#675871) as well on even more specifics regarding who is protected on what transactions for this subject.

Corey Bryant, so this means that a merchant is not protected from the chargeback if he has rendered his product to a fraudster?

Basically - yes. No matter what you do to help protect yourself, there will be some people that understand the system, how it works, and will know of ways to get his / her money back.

Does this mean you should not start a business online? No, the benefits usually outweigh the cons here and most people will succeed. Every chargeback you get, you will learn something new. You will probably keep adding things to your terms of service to help protect you and you probably will start to consider more services to help you vet the transaction.

Hi Arthur,

Great Question! Verified By Visa would assist in Fraud related charge backs only. There are different charge back reason codes- for instance verified by visa would not protect against - no credit issued or not as described etc.

Merchants would need to register with VBV and then VBV has to register with Global. Unfortunately, it can be a lengthy and expensive process.

As far as charge back time -frames- merchant or Issuer has up to 180 days to initiate a charge back.

In your case, I would recommend that you receive a positive match on AVS requests and only ship to the AVS address- and obtain signature upon delivery.

Please let us know how everything works out.

Best,

Erin

Hi Arthur,

What is the average ticket of your transactions and what is the geographic distribution of your client base?

VBV/MSC are excellent tools in the fight against fraud for most merchants. They can block a fairly high % of chargeback reason codes from reaching your account and allow you to successfully represent against other codes much more readily than if you did not utilize this.

Is it a 100% protection against all fraud? Most definitely not. There really isn't any perfect "silver bullet" that eliminates the potential of chargebacks completely... but the best defense is obtained by using as many methods at your disposal towards reducing your overall risk.

In addition to VBV/MSC, AVS & CVV - other methods to consider would be manual or automated phone verification calls. These have been very successful for many merchants in reducing the # of fraudulent orders they accept. Other methods such as looking at a MaxMind score (which can give you a match result on the card's BIN # to geographic location and other useful info) can be quite helpful.

On another note, I am not sure that I follow Erin's comment above about VBV being a "lengthly and expensive process." There are a variety of merchant providers in the market that offer VBV/MSC in combination with many different gateways.

Some merchant providers do not charge ANY fees for VBV/MSC, others charge modest fees and certainly some charge a lot more for it but it certainly is an area worth exploring as there is quite a bit of variance on the pricing from one merchant account provider to another.

In addition, it is easy enough to deploy a VBV/MSC account and the entire process only takes a few minutes and it can even be done on a fully automated basis. So it does not have to be a time consuming process a t all for you to enable VBV/MSC if your merchant provider readily supports this and has a good process in place for activating service for that platform.