Merchants offered tips on blocking fraud

[StevenAllen]

Interesting article in USA today - see below:

http://www.usatoday.com/money/compan...ure-usat_x.htm

[brian.mark]

Yeah, but they quoted that Steve guy... lost all credibility... just kidding.

What the article says to me is that card companies are still pointing fingers and don't want to take any of the blame yet, nor do they want to really help anyone but themselves. This is just a fraud of a seminar - not much better than identity thieves themselves. Pretending to do something isn't any better, maybe worse, than doing nothing.

Brian.

[StevenAllen]

Yes, the journalists will use a quote from anyone.

[MichelH]

Well, here is my personal quote, maybe they want to use that one as well:

Visa & MasterCard have deliberately done nothing with chargeback prevention programs or customer information for years as they have been filling their pockets for the past few years.

VbV and MasterCard Secure Code are a mess because of that as they introduced a program for customers and never ever explained to them how it works in the first place.

[CardinalCommerce]

Michel,

Why would MasterCard and Visa delibately try to take money from merchants and encourage fraud. The more fraud occurs the less people use their cards which means they make less money. Visa and MasterCard get nothing out of fraud besides loss of brand recognition.

[jestep]

I think that Visa and MasterCard are very quick to help out their cardholders, but are unwilling to help the merchants accepting their cards.

Merchants have no other choice than to accept Visa and MasterCard. It is a requirement for the success of the business. Consumers can have any one of 4 different brands of credit card.

Both Visa and MasterCard place all fraud accountability on the shoulders of the merchants. By doing this, they remove themselves from being named as the cause or even a factor of fraud. Merchants have virtually no recourse against a chargeback, while consumers have virtually unlimited rights.

It's funny that a merchant is accountable for processing a stolen card, but a consumer isn't accountable for loosing it.

Visa and MasterCard get nothing out of fraud besides loss of brand recognition.

Visa and MasterCard have completely removed their accountability from fraud, so there is no loss to them. The only action that they need to take is to tell consumers it is someone else's fault, and they remain the hero.

They're already really good at that....

[MichelH]

Jepstep's explanation tells it all.

Merchants can't drop Visa and MasterCard and a customer who gives away their password on the phone will get a new card from Visa and MasterCard just like that, so brand recognition has nothing to do with it. Visa/MasterCard did not teach or inform that customer to not give away the password. (Ok, he/she should know, but the majority of people have an IQ of less than 80 it seems...)

Visa and MasterCard could care less about online credit card processing, as this is only 3% of their annual sales volume. We have had a big fight with MasterCard concerning chargebacks on MasterCard Secure orders and they literally said to us on the phone: This is not our problem.

And they are making money on chargebacks: We pay USD 50 for every chargeback and that is definitely not a banking fee.

Online merchants are way too dependant on Visa and MasterCard; without it, we wouldn't survive. They control the market, the fees, the rules & regulations and everything else.

According to EEC rules, this is not allowed. The question here is: Who is powerfull enough to stop them?

THAT'S what is wrong with Visa/MasterCard. Hopefully, American Express will catch up with them soon.

[StevenAllen]

The frustration denoted here is the same frustration I felt and that is why I founded EmerchantsGroup.com.
Frankly, there is always more power in numbers and hundreds of voices have more clout then just one. It's all about community building and then utilizing the resources of that community.

[CardinalCommerce]

Michel,

Visa and MasterCard make nothing off chargebacks. The fees associted with chargebacks are issued by the banks to compensate for the overhead of manually processing them.

I am curious about your SecureCode fraudulent chargebacks.

What was the ECI response?
What is the reason code for the chargeback?

[StevenAllen]

Merchants are not claiming that Visa/MasterCard are being enriched by the the chargeback fee itself, but by the process. The process also includes the merchant processor and in some cases that fee can be 2 or 3 times the cost of the chargeback fee which is only $10.00 at the interchange rate. In addition, Visa/MasterCard charge a discount fee on EVERY transaction.

[nottheusual1]

There is no incentive (read $$) in the CC folks caring about the merchant - as a population, merchants have a high "mortality" rate and no option but to accept credit cards.

As an example, WalFart won their debit/check card suit against VISA/MC,

http://www.inrevisacheck-mastermoney...itigation.com/

who promptly increased their discount rate for everyone else to make up the reduced revenue stream, well, and to make up for all the free airplane trips from the awards cards (their shady explanation as "increased costs").

But don't feel lonely - this is the same industry with a "default" interest rate averaging 29.99% when interest rates on signature personal loans at the worst bank in town are only 17.25%. And mortgages are at sub-8% for "B" grade borrowers.

And look at the gift our elected representatives presented the industry with the new bankruptcy legislation.

So, don't feel lonely - they aren't biggots or anything - they dislike everyone equally. Now the federal bankruptcy courts will be the defacto largest collection agency in the country - all at no cost to the CC industry.

It seems the largest recipients of corporate welfare, from our tax dollars, care the least about their consumers.

:not_the_usual1
[you decide]
_______________
All in my opinion, which, when combined carefully with a $1 bill, gets you a cup of coffee at the corner store.

[MichelH]

Reason for chargeback:

'I don't recognize the charge.
Although I did gave my cc number and password to some gentlemen on the telephone who claimed there was something wrong with my account. I want my money back.'

MasterCard: 'Don't worry dear beloved customer, we will get your money back from this fraud merchant and we will block your credit card for future purposes. We will send you a new credit card for free!'

Merchant: 'Hey, what about my money? This order has been processed through MSC!

MasterCard: 'That's not our problem.'

There is no VbV or MSC that will garantuee anything. You loose either way.

(Some events in above correspondence may have been made up.)

[CardinalCommerce]

MasterCard SecureCode and Verified by Visa passwords and PINS cannot be taken over the phone. The system itself is designed to directly engage a cardholder and link them into their bank and then they submit a password. This relationsuip functions much like an ATM.

Are you doing a MOTO transcation and submitting via the web?

[MichelH]

A fraudster who has the CC number, CVV code and passwords/pins from the cardholder can do website transactions as well. They can get this information through telephone or a phishing email.

The problem is that Visa/MasterCard never tought or instructed their cardholders to NOT give away this information over the phone or email, but they are the ones that keep being rewarded while the merchant has to eat the loss.

This happens more than you think as there are still people out there who are unexperienced when it comes to buying online.

That's why I am saying that the whole VbV and MSC is a total fluke. We see fraud orders coming in every single day for VbV and MSC.

The only solution against fraud will be to have a cc terminal integrated in the keyboard for online sales. So, Microsoft, Visa and MasterCard, do your job and make this world a better place!

[CardinalCommerce]

You are required to read the Best Practices manual prior to participating in the programs which outlines how they should be used.

Most of our merchants have a seperate web app for their moto transactions therefore they are not required to submit a PIN/Pass to complete the order. I assume you are using the same app for both moto and ecommerce.

A fraudster who has the CC number, CVV code and passwords/pins from the cardholder can do website transactions as well. They can get this information through telephone or a phishing email.

This is true. They could possibley do this but our merchants are still protected and the bank is liable for this transaction as long as you are properly passing the data elements.

If these programs were a fluke why are the largest of all merchants participating and why has Visa alone processed 7 billion this past quarter in VbV volume?

[StevenAllen]

The core issue is that many merchants are bitterly unhappy, about the way the hand they are dealt by Visa/MasterCard and you see them expressing it here. Merchants are not stupid they see who structured the merchant processing program and they are unhappy with an unlevel playing field.

[nottheusual1]

I don't see a playing field of any type - you have no recourse except refusing to participate. Period.

We've recently eaten a chargeback ($489.00) that we showed the customer's signature on the UPS receipt, but he claimed he never received the product. Go figure. On our second charge-back of the year. But that didn't matter, either.

No alternatives exist. Well, shiny beads, but I hear they are tuff to stuff into an ethernet connection.

:not_the_usual1
[you decide]
_______________
All in my opinion, which, when combined carefully with a $1 bill, gets you a cup of coffee at the corner store.

[jestep]

Originally Posted by International Herald Tribune

Moreover, merchant advocates say the card companies and banks even profit from frauds. Not only do they take in charge-back fees from merchants of $25 to $30 for each fraudulent purchase, but in many cases - especially those involving online merchants that have riskier transactions - the retailer must also swallow the cost.

http://www.iht.com/articles/2005/08/...iness/card.php

Very good article

[kjohnson5576]

I'll put in my two cents also. It appears to me that the Credit Card Companies DO NOTHING to help out the merchant with fraud. I take a number of orders from foreign countries, primarily Europe & Canada. There is no AVS system or any other method to determine the card holder, so you really gamble when you take an out of country order. Why is this? Are not Visa and Mastercard associations with worldwide standards?

Also, yes, it appears that whatever the consumer says, Visa and MC back them up. Note it's in their rules that a package, unless signed for by the cardholder, can be charged back. How many of us ship ground and demand a signature??? It's an extra $1.5 or so for signature service. About the only people making money off on line transactions are the Freight people. Maybe the problem isn't with Visa and MC afterall, it could be UPS, FedEx and USPS. They have the most to gain.

Kent
www.discount-leather.net