Fraud and chargebacks guide

This document’s purpose is to give you a brief introduction and explanation to Chargebacks.

 

Chargeback type

Retrieval request

A Retrieval Request is when the cardholder / Issuer is requesting more information about the Transaction and it is a non-financial request. This will be fulfilled automatically by the system by providing to the issuer transaction information.

 

1st Chargeback

This would mean that a chargeback has been initiated against you. Should you wish to view further details for you to be able to make an informed decision, attached you will find data extracted which you can use to locate the case on RAM and on MyST. Further information as to how you can locate this information is provided further down. Kindly investigate and reply within 10 days with the documentation should you wish to dispute these Cases.

 

Re-presentment

These are 1st Chargeback cases that have been automatically represented by us, therefore from your end there will not be anything you need to action. Merchants must be aware that a Chargeback has a financial aspect and once a Chargeback is raised the Merchant account is debited.

 

2nd Chargebacks (Prior July 17th 2020)

For first chargeback cases initially raised prior July 17th 2020 the below process is still valid.

Such instances are received after a re-presentment for a chargeback has been made, and the Issuer or the Cardholder deem that the re-presentment was not valid. It is the last attempt to resolve a dispute before filing an arbitration case. You would need to advise us within 10 calendar days from the 2nd Chargeback date if you want to escalate this case.

Please bear in mind that additional fees may be charged should you wish to challenge the case further, in the event that the Issuer/Cardholder still doesn’t agree with our documentation and reason for returning the case, the case may be escalated to arbitration and the Card Scheme will have to decide on how to rule the case. We first will initiate a member mediation – this by default is EUR 20.00. If the issuer accepts, that would be the end of it. However, if the issuer does not accept our member mediation, we will need to escalate the case so that the card scheme could take a decision for this case. All this has to be within 45 days from the CBK2 date.

When the Card Scheme announces a decision, the losing party must pay the following:

Filing fee EUR/USD 150
Admin Fee EUR/USD 250
Technical fee EUR/USD100.00 where applicable
+
Chargeback amount

 

Mastercard Pre-Arbitration (After July 17th 2020)

Mastercard recently restructured the brand’s pre-arbitration process. As of July 2020, Mastercard’s pre-arbitration phase fits into the overall chargeback process like this:

The chargeback process has ended, yet the cardholder’s bank wishes to address information provided in the second presentment.

Pre-Arbitration Case Filing – The chargeback process has ended, yet the cardholder’s bank wishes to address information provided in the second presentment.

The merchant reviews the pre-arbitration case and does one of two actions:

• Accepts liability. The merchant’s bank accepts liability, and the case is closed.
• Denies liability and rebuts the case. The merchant’s bank uploads supporting documents and adds a short memo to explain why the case is being rebutted. This gives the cardholder’s bank a choice: accept liability or advance the case to arbitration.

In order to reject the case documentation should be provided 10 days within the pre-arbitration is received.

If you submit a pre-arbitration response, the case will likely advance to arbitration. Once an arbitration verdict is issued, the losing party will forfeit the original transaction amount and arbitration fees.

Should you wish to reject the pre-arbitration fees will be as follow as per Card Scheme Regulations should an arbitration be received:

Filing fee EUR/USD 150
Admin fee EUR/USD 250
Technical fee EUR/USD100.00 where applicable
+
Chargeback amount

If no communication is found or provided, we will take this as a sign that you do not want to challenge this case further and we will accept the pre-arbitration.

 

 

Visa Pre-Arbitration

In pre-arbitration the customer did not withdraw the chargeback but kept disputing after the representment. Honestly, we have no saying and we cannot predict how the card scheme ruling will be. It is up to the merchant to take such decision whether to go ahead with the case or not. On another note, no charges / fees will be paid shall the declining of a pre-arbitration be successful or shall the arbitration committee rule in your favour.

In order to view further details on transaction/purchase regarding the chargeback kindly log in to your Ram Tool access. You may view the above by accessing the Chargebacks tab and selecting Case List. In order to filter the list, kindly select the chargeback date listed above into the date filter, set status to All and click Search.

Failure to provide valid documentation in time will result in you not being able to re-present the case.

 

Pre-Compliance

At times, a problem between members is not covered by chargebacks regulations. To help resolve these kinds of rule violations the Card Scheme established this Compliance process, which offers member another dispute resolution. The merchant – like in the pre-arbitration process – can accept the case in order to avoid the case going to Compliance.

 

Compliance

Issuers and acquirers may submit a compliance case to the Card Scheme committee for review if they incur a loss and a valid chargeback or re-presentment is unavailable.

 

What should I do when I receive a chargeback?

Once you receive a chargeback, you need to decide whether you wish to accept the case or to challenge it. When a Chargeback is received, your merchant account is immediately debited with the chargeback amount and the case status is set to closed. To challenge the chargeback you will need to provide documentation to prove why you shouldn’t be liable for the transaction.

 

What is re-presentment?

As stated above, once a chargeback hits your account you can either accept or challenge the case. Re-presenting the case is another word for challenging. We, as your acquirer, will be providing the issuer with documents (provided by you) giving them the reason why the chargeback is invalid.

 

How do I proceed with a re-presentment?

• Send re-presentment documentation to the chargeback team Re-presentment responses
  must be sent to chargebacks@trustpayments.com.
• The subject line of the email must include “Chargebacks re-presentment” and the ARN
  number.
• For example, if the merchant is submitting a response to a re-presentment for ARN 85297866356650683623606, then the email subject should be: “Chargebacks Representment ‐ ARN 85297866356650683623606”.
• All evidence must be compiled into a single document not bigger than 18 pages.
• File must not be bigger than 20MB.
• The file must be named with the ARN.
• Files must be submitted in PDF format.
• If cases will be sent in a bulk, it’s important to send them in a Zipped file.
• We would need for the documents to be submitted within 10 days of us sending the Chargebacks Notification.
• Full card details should never be included.
• If the documentation is not in English, this must be translated as per Card scheme requirements.

 

Technical Violations and Usage of Compelling Evidence

Visa

Compelling evidence on Visa cases is classed as ‘Details of Identification Presented by the Cardholder’ and ‘A copy of identification presented by the cardholder’ e.g. Passport, driving license etc. This can only be used in defence documents for reason code 10.4 when the cardholder has visited the merchant location for the service or goods, e.g. a hotel deposit booking, a car rental, a collection from a shop where ID was taken.

If used in other instances, you will be liable for Technical Violation Fees (250USD per violation) if the case goes to arbitration. The merchant can also receive Technical Violation Fees for submitting a copy of the cardholder’s card on the representment and pre-arbitration responses. These fees are applied when a case is ruled on by Visa at arbitration.

The merchant may use cardholder IDs as compelling evidence (as specified in section 11.5.2 of Visa Core Rules and Visa Product and Service Rules guide) for the pre-arbitration/dispute responses. A technical violation could occur if the merchant requested a cardholder identification as a condition of purchase (Rule ID#0027481). If the cardholder IDs were provided as a part of the merchant’s compelling evidence, this technical violation will not apply. Trust Payments Malta can notify you via email if evidence provided contains this information, we will ask you to amend the document or confirm that you are happy to proceed with the dispute with the already provided documentation.

 

Mastercard

Mediators may apply technical violation fees (100 EUR each) per violation of the dispute processing rules on review of the case if taken to arbitration. In general, most cases have 1-2 technical violations (invalid chargeback, invalid second presentment, etc.). These are not generally based on what kind of evidence is used and there is no specific rule prohibiting proof of identification as evidence.

 

Will I be notified if I won the chargeback?

Once the re-presentment is done, you should follow the progress of your chargeback via your Omnipay access following the chargeback cycle. The issuer might not accept our re-presentment and decides to challenge the case further. The issuer has 30 days (Visa) & 45 days (Mastercard) from the re-presentment date to come back with the case again. If the case is not received as a 2nd Chargeback / pre-arbitration you can assume that the chargeback is won.

 

What if I want to just accept the case?

There will be no action required from your side as the case is closed and debited to your account. In certain instances however, some chargebacks are automatically re-presented by the system if an invalid chargeback is detected.

 

When I receive a pre-arbitration, what do I need to do?

You can either accept or decline the case in the time frame given to you by TRU Acquiring by sending an email to the chargebacks team.

 

Using Omnipay

In order to view further details about the transaction/purchase regarding the chargeback kindly log in to your Ram Tool access.

Login: www.omnipaygroup.com

Searching for the Chargebacks

• Go on Chargebacks Tab > Case List
• Status: All
• Date
• Merchant No: Input your MID
• Limit Results: No Max
• Search

To go into a particular chargeback you need to click on the Case ID/VROL or ARN and this will redirect you into that particular chargeback case. All information relating to the transaction will be found here. Please note that RAM Tool does not contain customer detail information. This system is for chargeback case management.

All Chargebacks received are set to status Closed. The chargeback amount is also debited. Should the merchant wishes to dispute the chargeback they can send documentation to the chargebacks team quoting the ARN (Acquirer reference number) in order for the team to allocate the documentation to the correct chargeback.

 

Most common chargebacks

Service not provided / not received

Merchandise or services ordered were not received or that the cardholder cancelled the order as the result of not receiving the merchandise or services by expected delivery date (or merchandise was unavailable for pick-up)

What can you do?

• If merchandise was delivered as agreed send us evidence of the delivery.
• If merchandise was software that was downloaded via the internet provide evidence that the software was downloaded/ received by the cardholder.
• Any correspondence with the customer which shows that the customer received the item.
• Delivery date agreed not yet passed.
• Any information you may have.

 

Fraudulent transaction – Card not present

The cardholder claims they did not authorize or participate in this transaction.

• If a credit is processed let the chargebacks team know. If it was a partial credit be sure to include an explanation as to why full credit was not issued.
• If it was a fully or partially Secured Transaction with an authenticated CAVV result, we can re-present the chargeback as invalid.
• Consider that direct contact with the Cardholder may not result in resolution. With fraudulent charges, the Cardholder's account was compromised, and the Cardholder disputed the charge. If you have reason to believe that is true, consider contacting the Cardholder.
• Provide Customer Logs, Profile details, e-mail correspondence and anything that proves that the cardholder participated in the Transaction.
• For Visa - If KYC documents are used in your response you may be liable for technical violation fees if the case goes to arbitration and Visa make a ruling, further information about these fees can be found in this guide.
• For Mastercard there are no rules explicitly prohibiting the use of KYC in chargeback documentation.

 

Not as described / Defective merchandise

The customer claims the goods or services received did not match the description/picture on your Web site or other documentation/information they received from you, or the merchandise arrived damaged, defective or otherwise unsuitable for the purpose sold. Additionally the customer claims they either returned the merchandise, cancelled the service or attempted to resolve the dispute with you.

• If you have not been contacted by the customer indicate clearly that you have not received the item back from the customer. Be sure to include any contact you had with the customer where you advised them to return the item. If you have not been contacted by the customer, include this information. Also, be sure to include a copy of the page on your website, where the business mailing address and “how to return” information is available to your customers – Should the customer subsequently return the item, you may receive a second Chargeback.
• If you have been contacted by the customer and you advised them to return the merchandise and you have not received it back – You may have a Chargeback representment right. To represent this Chargeback, indicate clearly that you have not received the item back from the customer. Be sure to include any contact you had with the customer where you advised them to return the item. If you have not been contacted by the customer, include this information. Also, be sure to include a copy of the page on your website, where the business mailing address and “how to return” information is available to your customers

 

Cancelled recurring transaction

Merchant continued to charge cardholder’s account for recurring transaction after receiving a notice of cancellation.

Note for merchants with variable recurring transaction amounts: When you set up the customer’s recurring billing, you should have disclosed that this charge would be for a variable amount and permitted the cardholder to set a range of approved charges. If a charge exceeded this amount and you did not notify the cardholder in advance, they are able to successfully dispute the charge using the above reason code. If the customer disputed the charge using that reason code, we recommend you contact the cardholder directly to obtain payment and determine if this recurring service should be cancelled.

• Proof that the charge represented services provided before the date of cancellation. Make sure you’re very clear about what services the charge represents. If you can demonstrate the customer was using the service during this period, we recommend you include that information.
• Proof of the cardholder’s date of cancellation. If they cancelled by email or mail, include a copy of the email or letter. If they cancelled by phone, include a print out of the customer contact log of their cancellation.

 

Cardholder does not recognise the transaction

The cardholder reviewed this transaction on their statement and contacted their bank, because they don’t remember making this purchase.

• Provide any documentation or information that would assist the cardholder in recognizing the transaction.
  • Transaction receipt
  • Shipping invoice / delivery receipts
  • Description of merchandise / service purchased
• If transaction was processed securely you have a re-presentment right.

 

Additional tips

• If the cardholder states, they are going to withdraw the chargeback we recommend you still go ahead and represent the chargeback to ensure you preserve your rights.
• To reduce risk of receiving a chargeback we recommend credits be issued to the account used in the purchase and not by check or money order.
• Be sure to provide the documentation by the due date to preserve your rights to dispute the Chargeback.
• Refusing or sending back returned items from your buyers will jeopardize your Chargeback re-presentment rights in cases where the buyer states the product is defective or not as described.
• Never issue a credit after a Chargeback has occurred. In doing so you risk paying the customer twice.

 

Merchant Transaction Reference Number

Transaction activity Tab > Processed Transactions > Input ARN in the Acquirer Ref: > Input date of Purchase > Search

The merchant transaction reference will be under the “Merch Tran Ref.” Column.

If you are processing with Trust Payments, you should add digits -70- to that reference. Example: 1-70-3424072

 

What is a Notification of Fraud?

Provision of the Notification of Fraud is the equivalent to the Visa’s TC40 & Mastercard’s SAFE report. This is provided to you with the hope that you can pro-actively use this data to possibly prevent fraudulent activity from happening. Important to understand that with this notification there is no funds being debited from you and that no response is required from yourself.

 

Version history

Version	Description	Author
2.2	Merchant Chargeback and Fraud Guide.	Marlene Cassar
2.3	Adjustment made for Pre- Arbitration, Arbitration process and Re-presentments.	Marlene Cassar
2.4	Second chargeback cycle is being discontinued for MC and pre-arbitration case filing is being added.	Bruno Brussius
2.5	Technical Violations and Compelling evidence	Tim Biles
2.6	Updated information around Fraudulent Transaction - Card Not Present. Updated information for VISA Arbitration Withdrawal Fees.	Tim Biles
2.7	Updated information for: Collaboration Pre-Arbitrations received – VISA Allocation escalations to Arbitration – VISA	Tim Biles
2.8	Changes to Compelling evidence whereby 13.1 was removed due to VISA annual Release. Change to Chargeback contact email.	Tim Biles
2.9	Update to Mastercard Case Filing Fees for January 2023.	Tim Biles