Credit Card Fraud WAY UP over the past week HELP

[ep2012]

Well actually:

1. I have to get the phone number to the card holder's bank from my bank & they are only open until 7 pm. I asked them if there was a place online I could find out the bank/number via the cc number & they told me no.

2. Also they told me that the card holder's bank won't make a notation in the account when I call that the client allowed the transaction (I would have to ask the card holder's bank of course) so it doesn't mean a lot in terms of them never being able to do a chargeback.

3. To clarify I'm not looking to do a phone authorization b/c the transaction has already gone through on my end via the SC & gateway. I'm not sure if you were confusing the 2 words verification/authorization or not.


Michelle

[deepsand]

No confusion here.

Your card processor/merchant acquirer should provide you with a means for determining the phone no. for the card issuer/servicer on a 24/7 basis.

And, VISA and MasterCard have 800 nos. for such that are available to any merchant. And, of course, for AMEX there is but a single no.

Additionally, there are now many on-line resources available for your looking up the card issuer/servicer based on the BIN (the 1st 6 digits of the card account no..) See BIN lookup.

Be aware that no ones BIN database is 100% complete and accurate, as such data are highly volatile, owing to new portfolios being created, and existing portfolios being transferred from one institution to another.

[ep2012]

Thanks for that.

So I spoke to the chargeback dept. again & told them I'd call up the card holder's bank, & she told me that it won't really matter in the end. All Visa EVER wants (a.s.h**es) is an imprint of the card.

I even stated the obvious, that a fraudster can walk into a retail store with a stolen credit card & fake ID (supposedly they are creating fake ID now to match the ccs) & do it that way, so what does it matter if the transaction is on or offline.

She told me they DO do that. I know they do. I knew a guy many many years ago who got a hold of ccs & had his friends go into stores & buy things. Of course they were eventually caught.

Seems they aren't very smart up in Visa/MC land if they think a signed invoice is going to solve all problems.

75% of all fraud is done by the client themselves or a family member uses the card & the card holder doesn't know they did. Maybe that number has decreased a bit b/c of the recession & people in desperate situations, but that's what I was told years ago & I believe it.


Michelle

[deepsand]

It's not that the Card Associations aren't smart, but rather that it is more cost effective for them to shift as much of the burden as possible onto merchants, so as to facilitate easy and carefree card holder use.

The only major brand that tries to be more equitable is AmEx.

[ep2012]

Right, they allow card holders to commit fraud & then they charge the companies the big bucks (chargeback fees) even when there's pretty clear proof it was the client or someone in their family who authorized the charge. Not to mention if you don't have the money to cover the prior transaction, you are in BIG trouble.

Then they increase their control over companies & even card holders saying there's too much fraud, so let's raise the interest rates, chargeback fees, yearly fees & so on.

Makes sense to me!!! NOT!

I can understand if the merchant didn't care & didn't try to protect their account, but at least for me, that's not the case.

I once got a call from a client's bank. She had called her bank claiming she never authorized the charge. It took her bank (I believe it was a small bank) all of 5-10 minutes to decide the client had authorized the charge & was just committing fraud. She wasn't going to allow her customer to do that & I was saved.

Some banks care & won't let customers get away with it. We need more banks like that around.

I will be calling the police to tell them there was fraud committed & they need to look into the situation.

Merchants need to start taking a stand against these fraudulent customers.

[deepsand]

It is not universally the case that charge-back fees are levied on the merchant. And, when they are, such come from ones merchant acquirer, not the card issuer/servicer or Card Association, in the form of a fixed schedule fee to cover the cost of of administering the matter.

As for pursuing legal remedies against those engaged in such fraud, unless they are in the same legal jurisdiction as are you, and/or you've sufficiently deep pockets for covering your legal expenses, that's rarely a practical option.

[ep2012]

I've never known a merchant not to be dinged by huge fees.

So when they find out it's the client committing fraud, do they ding them? LOL NOPE.

Not going to a lawyer, to the cops. Fraud is fraud & if they claim this was a fraudulent order, the police should be notified. The chargeback dept. told me to do this, so I'm mulling it over.

I may also submit it to http://www.ic3.gov/default.aspx

[deepsand]

Said fees are set forth in the contract between the merchant and his acquirer, and apply only to on network transactions, which includes VISA and MasterCard transactions. AmEx transactions are off network, and I've never seen AmEx levy such fee. Discover transactions may be either on or off network. And, I've yet to see a contract or proposed contract that carried such fee in excess of $30.

I know a merchant who has never paid such fee, which has encouraged him, when facing a cash flow problem, to play the float by initiating fraudulent transactions, with the knowledge that he'll get free use of the funds for a period of time at no cost to him.

As for the police, the jurisdiction of law enforcement is quite limited to that of the municipality or State in question. Furthermore, most card fraud is a matter of Civil Law, not Criminal Law. So, even if the card holder resides in the same State as the merchant, it is necessary to get either a County District Attorney or the State's Attorney General to take action, which is no mean feat.

[ep2012]

Well I'm not sure how you'd know what everyone's fees are with numerous banks. I guesstimate mine was around $40-45 PER transaction, so if the fraudster purchased 4 different products (these are batches), I'm charged fees 4 times.

Then if you don't have the funds in your bank account to pay for the chargeback, your other bank charges you fees. PLUS your merchant account bank will charge you fees if the debit comes back because there weren't funds in your account. FUN WOW!

Your friend is the exception to the rule I'M SURE. Most merchants are honest companies. And I don't see how he can continue to do that without his merchant account being pulled. You are ONLY allowed 1% chargebacks per annum & I've heard they are lowering that amount because of all the BS that's been going on in the industry.

I actually help businesses get merchant accounts, so I hear all kinds of stories.

My legal guy disagrees with you. I'm waiting to call the police before seeing what she does next since my bank sided with me & reversed the chargeback, BUT I've still lost big time.

So in the end people, ANY chargeback online has a maybe 10% chance of being winnable. Why? Because you DON'T have the swiped signed slip. This number goes up if you are a retail site that actually snail mails products to customers & you have proof of purchase. Anything intangible & we are screwed!

Here's what happens:

1. You receive the chargeback & have maybe 10 days to respond (if you are lucky) by the time you get the notice in the mail. Normally it's 21 days FROM the date of the letter sent to you which as you know could take a week to get to you.

That's assuming you didn't notice the debit from your bank account prior like I did, then you have around that 21 day mark or less.

2. You spend probably around 1-2 hours getting the proof printed off & ready to be faxed.

3. You file your paperwork proving the customer got what you delivered through e-mail, the phone, etc.

4. The chargeback department should be able to give you an answer within 24 hours if they like your paperwork enough to reverse your chargeback. Get them to fax it to you instead of snail mailing it, obviously this is faster.

5. The paperwork is then sent back to the fraudster's bank & their bank either sees that the transaction was real & won't allow the fraudster to continue their fraud, or let's the fraudster continue the crime & rejects the reversal. During this time they send the account holder the notice & the account holder has time to review the paperwork & respond.

They have around 30 days to notify you.

6. If they reject it, your only recourse UNLESS let's say the amount was over $1,000, is to allow the chargeback to go through your account AGAIN. Why? Because at that point if you fight it, it goes to arbitration & Visa can charge you a $500 fee & you STILL won't win.

Again, the ONLY way you can fight a chargeback is proof of delivery (if it really was fraud, this may not work) or a swiped card, & b/c we (online businesses which total how many now?) don't get swiped cards, it's a losing battle for online businesses. We are discriminated against & treated like we aren't as ethical or REAL as an offline business. I agree with them on some level, as many online bizes are a joke, but there are plenty who aren't. They could have come up with a better way to stop this from happening by now, the Internet has been around visibly since around 1994. That's almost 20 years now.

Most people do not understand how easy it is for consumers (I'm talking the REAL customer, not some criminal) to commit fraud. I'm still amazed there hasn't been a revolution to STOP Visa from allowing this to happen. Criminal type card holders do this all the time.

If a company does everything they possibly can to thwart fraud, they should NOT be treated in this manner. This has been going on for years now & it seems online businesses just take the abuse & the crimes continue - LOVELY!

Hope this helps educate people without depressing your Monday.


Michelle

[deepsand]

Well I'm not sure how you'd know what everyone's fees are with numerous banks.

Simple; I read the contracts of my clients, both effected and proposed. And, I've an understanding of Contract Law.

Your transactions never directly involve the card issuer. When you capture a charge, you acquiring bank credits your DDA, and debits the card issuing bank. In a charge-back, the card issuer debits your acquiring bank, who in turn debits your DDA.

Charge-back fees, if any, are set forth in the contract between the merchant and the merchant acquirer & the acquiring bank. Card issuers/servicers are external to such contracts, and have no legal standing for levying fees against the merchant; the only thing that they can do is to recapture the gross amount of the disputed transaction.

Your friend is the exception to the rule I'M SURE. Most merchants are honest companies. And I don't see how he can continue to do that without his merchant account being pulled. You are ONLY allowed 1% chargebacks per annum ...

There is no universality here. Each ISO makes its own contractual arrangements with one or more acquirers; each acquirer makes its own contractual arrangements with one or more acquiring banks, each of which makes its own rules with respect to how charge-backs are dealt with.

And, as this is a highly competitive market, there is no rule, but rather a dizzying array of contractual provisions.

I actually help businesses get merchant accounts, so I hear all kinds of stories.

And, as is generally the case, very many of such stories are incomplete and/or factually in error, as most merchants fail to fully read and comprehend their contracts.

My legal guy disagrees with you.

Disagrees with what? What I set forth are basic legal principles that hold throughout the US and much of the rest of the world.