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  1. #1
    Join Date
    Mar 2002
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    785

    The Verified by Visa Catch?

    I have been reading online and i have come accross something interesting.

    I read that if the card issuer is unable to chargeback a fraud transaction because it is blocked by verified by visa, they will just reclassify the chargeback as "item not received" because obviously the cardholder never got the item.

    This has put a scare into me, since i recently signed up for VbyV and disabled all fraud scanning for orders that return "chargeback protected" status. And have since accepted some large orders that i would have otherwise not accepted.

    Is this just a scare tactic or are they actually doing this?

    I could not find any information from anyone who has actually had experience with this, just rumours.

    Its too soon to know about my verified transactions, but i have never got an "item not received" chargeback.
    The only ones i ever get are fraud codes "not recognised" and "fraud MO/TO" which are both covered by verified by visa.

    Does anyone know?

    Thanks.
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  2. #2
    Join Date
    Jan 2005
    Posts
    432
    Wow that is scary!

  3. #3
    If you are shipping physical goods and have receipt of delivery then the card holder cannot claim to not have received the goods. But do make sure that AVS matches and you deliver to the billing address only.

  4. #4
    Join Date
    Jul 2003
    Location
    Castle Pines, CO
    Posts
    7,189
    Well I would hope the issuing bank would look at this iv the consumer called once. VBV will protect whether or not the merchant is enrolled in Visa. But MSC will only protect US merchants on US transactions if and only if the consumer is registered with MSC.

    I put an email in to a friend of mine over at one company that does VBV / MSC transactions who (the last time I spoke with her) she re-wrote things like this for people in terms that could be understandable. Since I was curious about a few of these as well.

    Leksus on here might know since he has been working with one of the other agencies that handles VBV / MSC

  5. #5
    Join Date
    May 2003
    Posts
    267
    Sure, here is the update.

    Unfortunately issuing banks indeed can change chargeback reason code from fraudulent (that are protected under VbV/MCSC) to non-fraudulent (that are not protected) and submit it again. Although card associations are very well against and prohibit it, it is a sad truth. I know for sure since we had exact the same case.

    Good thing happened that cardholder first filled "I did not do it" chargeback and then decided to call us saying this charge is fraudulent. Although we had no obligations to issue refund since transaction was perfectly authenticated with VbV, we still refunded it. And guess what... in about a month we are getting nice chargeback for this same transaction with reason code "services not rendered"! Oh, boy, you should have seen the letter I wrote to the issuing bank explaining that I have a proof that customer called himself, and he was alive, and in good health and memory, and clearly stated that this charge was fraudulent. I just mentioned that unless we receive a credit for full amount of this chargeback their action will be reported to Visa. The credit was posted in about 4 days without any comments

    However, the number of such cases can not be so big to impose a serious problem. Nevertheless, you should be collecting all other information regarding each and every order so you can use such details to defend yourself during representation process.

    First of all I think you made a mistake by eliminating other fraud detection tools than VbV/MCSC. Not only you will loose legitimate sales for cards not enrolled in those programs, but you also put yourself at risk since, as you mentioned correctly, fraud is far not only a reason for chargebacks. Since you sell hosting services as I understand, I would still collect some IP addresses and do GeoIP verification, along with AVS match (also latter has not been proved much reliable). Phone call verification sometimes can also be in good help.

    And here is the last important thing. Only fraudulent chargebacks issued for US VISA cards are automatically blocked on higher level and never seen by both merchant and processor. All other chagrebacks, even authenticated with VbV/MCSC, will be conveniently deducted from your bank account and you will have to represent it. Regardless of the outcome from representation process you are out of chargeback fee (usually $25). Therefore merchants should protect themselves by all possible protection tools, although no doubt, VbV/MCSC are the best so far.
    Amirocms.com

  6. #6
    Join Date
    Mar 2002
    Location
    Posts
    785
    Quote Originally Posted by Leksus
    First of all I think you made a mistake by eliminating other fraud detection tools than VbV/MCSC. Not only you will loose legitimate sales for cards not enrolled in those programs, but you also put yourself at risk since, as you mentioned correctly, fraud is far not only a reason for chargebacks.
    I just recently started using it.
    I did not stop using other fraud tools completely, i simply made an exception if the transaction is protected it would be processed without any further checks, all other orders go through the normal checks.

    Just in the last 2 weeks we started getting fraud orders, they passed all geoip checks and in some cases even got fully authenticated by VbV (ECI 05 and Y signature) suggesting they know the passwords for the cards.

    These were all high value orders on further checks the IPs were all from datacenters or servers of web hosts and not regular ISPs (like EV1servers, theplanet.com etc...) browsing to the IPs would show the cpanel default page.
    Suggesting someone had compromised or otherwised used these machines as proxy servers for the fraud orders.

    Im just dissapointed, i thought verified by visa was supposed to put and end to this sort of thing.

    About the international, isnt the international fraud codes included in the ones that are blocked?
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  7. #7
    Join Date
    May 2003
    Posts
    267
    Quote Originally Posted by Host Ultra
    I just recently started using it.
    I did not stop using other fraud tools completely, i simply made an exception if the transaction is protected it would be processed without any further checks, all other orders go through the normal checks....

    About the international, isnt the international fraud codes included in the ones that are blocked?
    You did right. We also implement the same logic. If transaction passes VbV/MSCS, we do not verify further. However, if you are in doubt and order amount is high you can always put additional phone verification on a top of VbV/MCSC. There should be no problem for real cardholder to pass it, and definitely will create a problem for a fraudster.

    From my experience if you have ECI05 for Visa and ECI02 for MC, 99% it is a real cardholder since it is impossible to steal PIN from the bank database. The only way to get VBV/MCSC PIN is to enroll the card. I would accept such order.

    In case you get a chargeback for reason like "services not rendered" , it is quite easy to fight, since you can call cardholder and see what actual kind of chargebacks he filled. Caredholder will never say "service not received" if he actually never authorized the purchase. It is strictly bank's initiative to change chargeback reason code and they do it without cardholder's knowledge. Once you locate the cardholder and press him to the wall, you win the case.
    Do not worry and get those orders accepted.
    Last edited by AmiroPay; 01-04-2007 at 12:28 AM.
    Amirocms.com

  8. #8
    Join Date
    May 2003
    Posts
    267
    Oh, forgot to mention.

    chargebacks for all international cards are not automatically blocked. It is processed like a regular chargeback and it is a burden for merchant to further represent it using all available tools, including VbV/MCSC authentication records
    Amirocms.com

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