Chargeback policies &
rules are heavily weighted to the card holder per Visa/MasterCard regualations
so this is not a NoblePay policy so we don't have control or influence
over their policies.
NoblePay doesn't manage
Chargeback disputes as once a chargeback is opened the processing network &
the card associations handle the dispute not NoblePay.
All processors chargebacks
are directly managed but their respective acquirers sponsor bank.
For example NoblePay client
chargebacks are managed by the EVO Chargeback department which has the direct
relationship with HSBC bank where our merchants are underwriten through.
So any experience, good or bad a merchant has during a chargeback dispute would have been through the staff at EVO &
HSBC NOT NoblePay.
Chargebacks are a huge
headache for all but if you read these best practices provided by
Visa/MasterCard below you'll be able to protect yourself from future issues.
Introduction to the
Chargeback Process
III. Second Chargeback and
Second Reversal Phase (MasterCard only):
Once a Reversal (and the
subsequent debit) is received back at the Issuing Bank, they will then forward
the “Merchant’s Letter" back to their Cardholder for a response. If the
Cardholder wishes to pursue the dispute further, they then send in a “Rebuttal
Letter" back to the Issuing Bank and if the Issuing Bank feels that their
response is valid, will submit a Second Chargeback. A Second Chargeback
functions just like a First Chargeback, except a Chargeback fee is not assessed
and the disputed amounted is immediately debited out of the Merchant’s business
checking account. The Merchant is sent another letter explaining what, if any,
documentation is required to pursue this dispute further. This “Second
Chargeback" phase of the dispute is then considered “Resolved to the
Merchant" and will remain closed until the Merchant responds back to the
letter sent to them. If the Merchant does indeed respond to the letter sent to
them a ‘"Second Reversal" phase of the dispute is opened. An Acquirer
Chargeback Analyst will then review the letter and one of two scenarios will
occur:
1.If the Chargeback Analyst
deems the Merchant’s response as invalid, they will close out this phase as
“Request Denied" and will mail a letter to the Merchant explaining why the
Chargeback cannot be pursued further at that time.
2.If the Chargeback Analyst
deems the Merchant’s response as valid, they will submit a
“Pre-Arbitration" letter directly to the Issuing back advising that the
Acquirer believes the Merchant’s claim is valid and that Acquirer will request
MasterCard to make an Arbitration ruling on the dispute if the Issuer disagrees
with the Merchant’s claim.
a.If the Issuing Bank agrees
with the Merchant’s claim, they will simply forward the funds back to the
Acquirer and the Acquirer will then credit the Merchant’s business checking
account accordingly. The dispute at this point is considered “Successful"
and cannot be re-opened.
b. If the Issuing Bank
disagrees with the Merchant’s claim, they will send a letter back to the
Acquirer advising of such. The Acquirer will then send a form to the Merchant
requesting that they sign the form which makes the Merchant liable for
Arbitration filing fees. (When MasterCard makes an Arbitration ruling, it
assesses a $400.00 filing fee to the loser of the dispute) If the Merchant does
not agree to the fees, the Acquirer simply closes out the Second Reversal phase
of the case as “Unsuccessful". If the Merchant does indeed agree to the
fees and submits the signed form, the Acquirer then submits an Arbitration
Request to MasterCard directly.
i. If MasterCard rules in the
Merchant’s favor, the Issuer is immediately debited and the Acquirer is
credited for the amount in dispute and forwards the credit to the Merchant’s
business checking account. The Issuing Bank is also assessed the $400.00 in
filing fees and the Acquirer closes this phase of the dispute as
“Successful"
ii. If
MasterCard rules in the Merchant’s favor, the Issuer is immediately debited and
the Acquirer is credited for the amount in dispute and forwards the credit to
the Merchant’s business checking account. The Issuing Bank is also assessed the
$400.00 in filing fees and the Acquirer closes this phase of the dispute as
“Successful"
IV. Issuing Bank
Pre-Arbitration Phase (Visa only):
Once a Reversal (and the
subsequent debit) is received back at the Issuing Bank, they will then forward
the “Merchant’s Letter" back to their Cardholder for a response. If the
Cardholder wishes to pursue the dispute further, they then send in a “Rebuttal
Letter" back to the Issuing Bank and if the Issuing Bank feels that their
response is valid, will submit a “Pre-Arbitration" letter directly to the
Acquirer advising that they feel that their Cardholder’s claim is valid that
they will request Visa make an Arbitration ruling on the dispute if the
Acquirer disagrees with the Cardholder’s claim. The Merchant is then sent
another letter along with the Cardholder’s rebuttal advising that they need to
respond within 10 days. If the Merchant does not respond to the letter within
the specified timeframes, the Acquirer Chargeback Analyst will credit the Issuing
Bank back for the disputed amount and in turn debit the Merchant’s business
checking account. This phase of the dispute will then be closed as
“Unsuccessful". If the merchant does indeed respond within the specified
timeframe, one of two scenarios will occur:
1. If the Chargeback Analyst deems the
Merchant’s response as invalid, they will close out this phase as “Request
Denied" and will credit the Issuing Bank back for the disputed amount and
in turn debit the Merchant’s business checking account. The Chargebacks Analyst
will also mail a letter to the Merchant advising of the debit and will also
explain why the Chargeback cannot be pursued further at that time.
2. If the Chargeback Analyst deems the
Merchant’s response as valid, the Acquirer will then send a form to the
Merchant requesting that they sign the form which makes the Merchant liable for
Arbitration filing fees. (When Visa makes an Arbitration ruling, it assesses a
$400.00 filing fee to the loser of the dispute) If the Merchant does not agree
to the fees, the Acquirer simply closes out the Pre-Arbitration phase of the
case as “Unsuccessful" and will credit the Issuing Bank back for the
disputed amount and in turn debit the Merchant’s business checking account. If
the Merchant does indeed agree to the fees and submits the signed form, the
Acquirer then responds to the Issuing Bank advising them that they do not agree
with the Cardholder’s claim. The Issuing bank then submits an Arbitration
Request directly to Visa.
a. If Visa rules in the Merchant’s favor, all
funds remain where they are and in addition, The Issuing Bank is assessed the
$400.00 in filing fees. The Acquirer then closes this phase of the dispute as
“Successful"
b. If Visa rules in the Issuing Bank’s favor,
they are immediately credited for the amount in dispute and the Acquirer is
immediately debited for the same amount and in turn this amount is immediately
debited from the Merchant’s business checking account along with the $400.00 in
filing fees. The Acquirer then closes this phase of the dispute as
“Unsuccessful"
Preventing Chargebacks
Most chargeback situations
arise at the point of transaction—at the time the transaction is completed—and
most can be prevented with a little training.
Consider these tips to avoid
potential chargebacks...
Card Present Transactions
Card-not present Transactions
Card Present Transactions
1. Do not complete a transaction if the
authorization request was declined. Do not repeat the authorization request
after receiving a decline.
2. If you receive a “Call" message in
response to an authorization request, call your authorization center. Be
prepared to answer questions. The operator may ask to speak with the
cardholder. If approved, write the authorization code on the sales receipt. If
declined, ask the cardholder for another Visa card.
3. Make an imprint for all card-present
transactions. If you have a point-of-sale terminal with a magnetic-stripe
reader, swipe the card through the reader for every face-to-face transaction. If
the terminal isn’t working or a card’s magnetic stripe cannot be read,
key-enter the account information and make an imprint of the embossed
information onto the sales receipt using a manual imprinter. Even if the
transaction is authorized and the cardholder signs the receipt, if the receipt
does not have an imprint of the embossed account number and expiration date,
the transaction may be charged back to you for “no imprint" if the
cardholder later denies participating in the transaction.
4. Obtain cardholder signature. The cardholder’s
signature on card-present transactions is required. Failure to obtain the
cardholder’s signature could result in a chargeback for “no signature" if
the cardholder denies authorizing or participating in the transaction. Always
compare the signature on the sales slip and the signature on the back of the
card. If the card does not carry any signature, ask the customer to show you a
picture ID, and have him sign the card at the time of purchase.
5. Make only one imprint of the card for each
transaction. Making more than one imprint can lead to duplicate deposits and
increase the chance of a chargeback. If you need to redo a sales receipt
because of an error, write “VOID" across the incorrect sales receipt, inform
the cardholder, and tear up the incorrect sales receipt in view of the
customer.
6. Ensure that transactions are entered into
point-of-sale terminals only once—and deposited only once. Entering the same
transaction into a terminal more than once, or depositing both the merchant
copy and the bank copy of the sales receipt with your acquirer, or depositing
the same transaction with more than one merchant bank can all result in
“duplicate transaction" chargebacks.
7. Ensure that incorrect sale receipts are
voided and that transactions are processed only once.
8. If your establishment has policies regarding
merchandise returns, refunds, or service cancellation, disclose these policies
to the cardholder at the time of the transaction. Your policy should be
pre-printed on your sales receipts within ¼ inch of cardholder’s signature; if
not, write or stamp your refund/return policy information on the sales receipt
near the customer signature line before the customer signs (be sure the policy
shows clearly on all copies of the sales receipt). Failure to disclose such
policies at the time of the transaction will be to your disadvantage should the
customer return the merchandise.
9. Deposit sales receipts with your merchant
bank as quickly as possible, preferably within one to five days of the
transaction date—do not hold on to them. Failure to deposit in a timely manner
can result in chargebacks for “late presentment."
10. Deposit credit receipts with your acquirer as
quickly as possible, preferably the same day as the credit transaction is
generated. Failure to process credits in a timely manner can result in
chargebacks for "credit not issued."
11. Keep customers informed on the status of
their transactions.
12. If the merchandise or service to be provided
to the cardholder will be delayed, advise the cardholder in writing of the
delay and the new expected delivery or service date.
13. If the merchandise ordered by the cardholder
is out of stock and delivery will be delayed or this item is no longer
available, advise the cardholder in writing and offer the cardholder the option
of purchasing a similar item or canceling the transaction. Do not substitute
another item unless the customer agrees to accept it. By giving the customer
notice and the option to cancel, you may help avoid a customer dispute regarding
the merchandise and a possible chargeback.
14. Ship merchandise before depositing
transaction. Don’t deposit transactions with your merchant bank until you have
shipped the related merchandise. If customers see a transaction on their
monthly Visa statement before they receive the merchandise, it could lead to a
preventable chargeback.
15. When refunding a customer, always credit the
same card that was used for the corresponding sale.
16. Respond to all sales draft requests. Should
you receive a request for copy of sales draft, respond immediately. Failure to
send in copy will result in a chargeback with no representment rights.
17. Change printer ribbon frequently- illegible
sales drafts can also initiate chargebacks.
Card-not present
Transactions:
1. Do not complete a transaction if the
authorization request was declined. Do not repeat the authorization request
after receiving a decline.
2. If a customer requests cancellation of a
recurring transaction which is billed periodically (monthly, quarterly,
annually), always respond to the request and cancel the transaction immediately
or as specified by the customer. As a customer service, advise the customer in
writing that the service, subscription, or membership has been cancelled and
state the effective date of the cancellation. Failure to respond to customer
cancellation requests almost always leads to chargebacks.
3. If the merchandise or the service to be
provided to the cardholder will be delayed, advise the cardholder in writing
(e-mail for e-commerce merchants) of the delay and the new expected delivery or
service date. Also, if the item is out of stock or no longer available, offer
the cardholder the option of purchasing a similar item or canceling the
transaction. Do not substitute another item unless the customer agrees to
accept it. By giving the customer notice and the option to cancel, you may help
avoid a possible chargeback
4. Ship merchandise before depositing
transaction. Don’t deposit transactions with your merchant bank until you are
about to or have shipped the related merchandise. If customers see a
transaction on their monthly Visa statement before they receive the
merchandise, it could lead to a preventable chargeback.
5. When refunding a customer, always credit the
same card that was used for the corresponding sale. Do not offer a check or
other form of payment in place of a refund.
6. Use the Address Verification tool (AVS) and
require a perfect match on cardholder’s billing address. Partial AVS match will
not stand in a “non authorization" chargeback scenario. If you need
assistance in setting the AVS properly on your Gateway, contact your payment
gateway provider or the Loss Prevention department of your credit card
Processor for assistance.
7. Make sure the billing and the shipping
address are the same. If not, make sure you verify the shipping address. You
can search through the Yellow-White pages, ask for a copy of a utility bill, or
a copy of a Driver’s License to validate the shipping address. You can also ask
the customer to call the Issuer and add the new address to the billing
information
8. Obtain and verify the Card Code (CVV2/CVC2).
This is the 3-4 digits number on the back of your card (on the front for
American Express). This information can be captured only if your shopping cart,
and your gateway are set up for it. Please, contact your webmaster and/or
Gateway provider for details.
9. Cancellation/Return Policy needs to be
acknowledged by cardholder. Policy needs to be acknowledged by the customer.
For telephone or mail order merchants, policy must be acknowledged with a
signature on the order form, contract, or invoice. For e-commerce merchants,
policy can be incorporated in the online Terms and Conditions of the sale, and
require the cardholder to click on an “I agree" button before completing
the order.
10. Generate an RMA number for submitted
cancellations.
11. Obtain signed proof of delivery. Tracking
numbers without a signature are not considered valid proof of delivery.
12. Verify the Internet Protocol (IP) address.
Even though the IP verification is not a 100% guarantee, adding this feature
will help you detect fraud. Your Gateway provider and/or other software vendor
should be able to help you get started with this validation process. There is a
variety of IP validation software that can be downloaded at no cost.
12 potential signs of Card
Not Present Fraud
Keep your eyes open for the
following fraud indicators. When more than one is true during a
card-not-present transaction, fraud might be involved. Follow up, just in case.
1. First-time shopper: Criminals are always
looking for new victims.
2. Larger-than-normal orders: Because stolen
cards or account numbers have a limited life span, fraudsters need to maximize
the size of their purchase.
3. Orders that include several of the same
items: Having multiples of the same item increases a criminal's profits.
4. Orders made up of “big-ticket" items:
These items have maximum resale value and therefore maximum profit potential.
5. “Rush" or “overnight" shipping:
Crooks want these fraudulently obtained items as soon as possible for the
quickest possible resale, and aren’t concerned about extra delivery charges.
6. Shipping to an international address: A
significant number of fraudulent transactions are shipped to fraudulent
cardholders outside of the U.S. Visa/MC address verification (AVS) can't
validate non-U.S., except in Canada and the United Kingdom or few other banks
who participate in the US AVS program.
7. Transactions with similar card account
numbers: Particularly useful if the account numbers used have been generated
using software available on the Internet.
8. Shipping to a single address, but
transactions placed on multiple cards: Could involve an account number
generated using special software, or even a batch of stolen cards.
9. Multiple transactions on one card over a very
short period of time: Could be an attempt to "run a card" until the
account is closed.
10. Multiple transactions on one card or a
similar card with a single billing address, but multiple shipping addresses:
Could represent organized activity, rather than one individual at work.
11. In online transactions, multiple cards used
from a single IP (Internet Protocol) address: More than one or two cards could
definitely indicate a fraud scheme.
12. Orders from Internet addresses that make use
of free e-mail services: These e-mail services involve no billing
relationships, and often neither an audit trail nor verification that a
legitimate cardholder has opened the account.
Visa – MasterCard Card Not
Present fraud prevention tools
Appropriate preventive action
can help reduce fraudulent transactions and potential customer disputes. Make
use of these Visa tools and controls to verify the legitimacy of the Visa
cardholder and the card in every card-not-present transaction.
