Visa changes chargeback dispute program
usa.visa.com
usa.visa.com
I’m pretty opposed to this change, even though it’s veiled in terms of fairness. The fact is, the banks and Visa are far too quick to deny disputes.
This reeks of all of the times that an industry foists some type of “protection“ on consumers to address some alleged abuse of the system.
For example, you used to be able to discharge student loans in bankruptcy. Then the industry made up a BS narrative that people were taking out tons of loans, getting their degrees, and then filing for bankruptcy em masse. It was a lie. The number of people who are filing for bankruptcy and getting student loans discharged was infinitesimally small. But that didn’t stop them from lobbying Congress for modifications that prohibit the discharge of student loans in bankruptcy. And, well, you know how the rest goes.
My point is, the alleged abuse is almost certainly a very small, or even, non-issue. But these changes will have dramatic, negative repercussions on a large swath of customers.
Wow really? I thought that abuse would be a certainty given grads have no assets and you can’t repossess a degree.
And beyond those systemic barriers, believe it or not, most people aren’t looking to just screw over whatever entity On their loans. You think people want to screw over student loan companies because you exist in the current system where predatory behavior occurs, where you can’t discharge your loans in bankruptcy. As such, you are used to seeing stories about peoples lives being ruined by their student loans. That’s why people hate student loan companies. In a world where student loan companies weren’t so predatory and encouraged to be predatory by unfair bankruptcy exemptions, the narrative towards that might be completely different, and more favorable.
*Just to get a head of a comment that might be forthcoming, I am well aware that student loans actually can be discharged in bankruptcy. But they are given favorable treatment (for the creditor), and you have to make an above and beyond showing to have them discharged relative to other forms of debt.
Which understates things as larger companies are more likely to run routine credit checks.
And when you think about it, if you're going to hire someone involved in your money stream, wouldn't you want to know if they've ever, say, been indebted to a casino? Had a home repossessed?
Hell, even a walmart cashier might handle 1k or 2k of currency a day.
Downvote away, but she simply isnt paying the student debt, and that is because she feels that it is a god given right to get it for free(aka have other people pay for it). Thus proving my point, people do not neccesarily pay simply because they are able to.
But preventing people from discharging student loans in bankruptcy means that there was no pressure to keep college costs low, because there's no reason to be cautious with giving enough loans to cover exorbitant costs.
Get rid of the safety valve, and then see what happens as the colleges realize there's no balance of power... you get the current situation.
Even with nondischargeability for student loans in general, only loans participating in specific federal programs (which have limits, both as to institutions and amounts) were eligible for federal guarantees, and the part of those programs that lenders other than the federal government itself participated in was ended in 2010.
There’s 1000 other things we need to fix with the system too.
We as a society (and taxpayers) should not help people pay rip-offs, whether they be those perpetrated by colleges or those perpetrated by insurance companies. We should be stopping the rip-offs themselves.
The solution here appears to be that the government should not be involved with subsidising or backing student loans at all. Then you have a free choice - invest in student loans if you want to "help people pay rip offs" or don't if you don't.
All under the guise of “helping” students while keeping taxes low.
A lot of these schools wallow in obscene endowments and own a shitload of prime real estate, while paying no taxes and bringing in loads of money on sports. It's time to bring them to heel.
Exactly. Education should be fully provided by the government for every person.
And how is it related to the friendly fraud issue?
Yeah, I've never really understood this logic either. If someone lends money from me to, let's say go buy a tow truck, and then is not able to repay the loan because there are too many other folks with tow trucks (or for whatever other reason), why should that be my problem? I gave money with the expectation that it would be paid back. That is by definition what lending is, yet student loans are somehow touted as an exception where repayment shouldn't be seen as compulsory.
You can't take back someone's education, which is what makes this type of loan intrinsically riskier. Because you can never get rid of student loans, though, they don't have to do any risk analysis or say "no" to any students. They say "sure", no matter what the data says on the ability to repay for the type of degree that you're applying for. Since nobody is denied funding to go to college, colleges have no economic incentive to price degree programs by expected income. The result is that college becomes more expensive and less accessible to everyone.
It's a really bad situation.
Sure you could, you could rescind someone's diploma so that they no longer have the degree.
If one has a degree in winemaking or philosophy, does rescinding their degree have a significant impact on their employability? If not, then they could just tell the bank to rescind it while still getting the education.
The practical affect would likely make college much more difficult to access for minorities and other individuals low on the socioeconomic status spectrum. It would likely have a net effect of slowing upward mobility and create a college aristocracy.
If you lend money to tow-truck operators then it is absolutely possible for them to go bankrupt and for you to fail to recover the entire value of the loan. If you don't like that risk you instead can lend to safer borrowers, the ultimate being the US Government itself - and the quid pro quo is that you can't charge as much for those loans.
However, what does your intuition say when you try to think systemically? There is some percentage of people who get screwed by loans due to unforseen circumstances and no fault of their own. Student loans are universal enough that the stats make this number of people non-insignificant. If it's nobody's fault, who should shoulder how much of the burden?
So, say we make up a number and consider that we know around 10,000 people per year get student loans and eventually end up below the poverty line due to severely bad luck. The situation isn't their fault; it's also not the bank's fault. So what do you do as a policy maker?
What if you knew that, by forgiving student loans, 8,000 of those individuals would bounce back and become productive members of society, while only 1,000 would otherwise? What are negative and positive impacts on forcing banks to shoulder the burden of these defaulting loans? What about forcing individuals to shoulder the burden?
The idea is that the lenders would stop lending to students who are likely to fail or who are studying something they won't be able to get a job in. The new reality would be: either study something with serious job opportunities, or pay out of pocket.
For what it’s worth, I would probably agree with that stance. You’re talking to a guy who had more than $100,000 worth of student loans and lived really cheap to pay them off as soon as possible. I’m not going to deny that a part of me cringes when they talk about student loan relief, because I’ll feel like a donkey for paying mine off.
Your comment could apply to any kind of debt that people get discharged in bankruptcy. Credit card debt, judgments from courts. The person or organization on the other side of the dead might not have done anything wrong (indeed, if we are talking about a judgment from a court, the person that you owe that money to might’ve actually been harmed by you). However, these debts are subject to the bankruptcy code. But not student loan lenders. (I know this is an oversimplification, see my * on another comment)
The relationship to the friendly fraud issue is pretty straightforward. Simply put, I believe Visa is over stating the costs and risk of friendly fraud the same way that the industry did with regards to discharge of student loans. We see this in other contexts as well. Government actors are often trying to strip fundamental rights to privacy and from unreasonable searches in the name of protecting us from terrorism or child pornography predators. I’m not denying that those risks exist, the same way that the risk for friendly fraud exists. I’m simply saying that the proponent of the “corrective measure“ is probably over stating the threat.
Why should the lender be completely insulated against a borrower's inability to repay? Why should a lender be able to lend for education without any diligence on borrower's ability to repay, but not in other domains?
How is the lenders fault you lost your job and can’t pay your mortgage? What a genius justification.
All that is being proposed is the cessation of the government providing services to creditors where they chase down some disabled person with student debts from 30 years ago and shake them down for money and garnish their wages. It's simply not nessecary and not in the interests of the government's stakeholders to provide such services to creditors.
If this means that schemes where a debtor lends out so much money that they will go broke unless they end up milking people for decades aren't viable anymore, so be it. If a debtor goes broke due to such regulatory changes, they should not be compensated, as it's not reasonable to expect zero risk given how unpopular the debt bondage is. Normally one wants to only make such changes with compensation, in order to give lenders confidence their contracts will be enforced or at least they will be compensated, but the status quo around student debt is so extreme and exceptional I don't think that's necessary here. Outside of student debt, prison labor is the only other form of legal slavery I can name in the United States.
Rather than trying to limit losses it’s an attempt to expand the industry.
Prohibiting bankruptcy doesn't drive delinquent loans lower.
If bankruptcy was a possibility lenders would be much more cautious about tuition rates and potential for a borrower to actually pay it back.
For instance, you can disallow discharging debts for a period of years after the education ends. The status quo is pretty corrupt.
⸻
1. I went to a credit counseling agency in the midst of that financial distress and the counselors all insisted that I didn’t want to go through bankruptcy although in retrospect, that was exactly what I should have done. What I didn’t know then was that the credit counseling agencies are all run by the credit card companies.
I don't think it'd really be a thing today either, but the circumstances are clearly very different.
Max Levchin sort of tore apart Sift trying to get it to spit out money. I’m sure being able to play chargebacks from both sides was always his dream.
IMO, a non-dischargeable loan should have a 0% interest rate by law. All banks would get is an origination fee, capped by statute to some low amount (say, 1% of the principal).
I'd be in favor of this being applied retroactively, so that all interest paid on non-dischargeable student loans in the past was applied to the principal and any overages refunded to the borrower (perhaps over a period of time or against taxes owed or similar).
I'd prefer both of these to be done instead of a one-time "student loan forgiveness" program.
It sure doesn't look that way from my end.
I maintain the payment processing stuff for a small seller of digital goods and services. The services need to regular contact our servers in order to perform their service, and in that contact they identify which customer is using them.
If a customer cancels and asks for a refund we always give the refund. If they are more than around 20% into the term of their service and our logs show that they have been using it we might prorate the refund, but usually we just give a full refund.
No hoops. They can cancel and request a refund by calling support or do it entirely online without any need to interact with a human.
The only people who might have a good reason for a chargeback are people whose credit cards were stolen and the thieves purchased something from us to check if the card was valid. We almost never see such chargebacks.
Almost all the chargebacks are people who tell their bank that they don't recognize the charge but they have actually been using the service actively for years. Some are on monthly subscriptions and so have had dozens of charges from us before and now suddenly have no idea who we are.
Heck, a fair number of these people even have had their subscriptions stop because their on-file card was no longer valid, came to their account page at our side and updated their payment info to reactivate their subscription, and then the next time it is time for renewal they are calling their bank saying they never heard of us.
I don't think we have ever been able to convince the bank or card companies to deny any of these chargebacks. None of the use or transaction history matters. They just tell us to FAX them a copy of the customer's signed receipt from the original sale.
For example, I recently had a client who had his crypto.com account hacked. That account was tied to his checking account. The hackers debited his checking account, by buying bitcoin, and then transfer it out the bitcoin. My client disputed the charges, and the bank denied all of his disputes.
This was all in the context of a well documented breach of a major telecom company. He had all of the substantiation. It was clear that the bitcoin had gone into a very large wallet for purposes of fraud. Despite all of this, he was denied his dispute.
Long story short, we got his $10,000 back, got him another $5000, and the bank pay my fees. That was all based on federal law, not visa dispute rules. So the good news is that these changes do nothing to diminish those lasting rights under the law. But it should put this issue on your radar. If they are starting here, it won’t be long until they start lobbying Congress to soften the protections in law as well
That’s a really big niche And should turn up lots of attorneys, but there are some similarities between that type of practice and this other type of consumer protection practice. So even if they don’t have direct experience, they should still be comfortable in that realm.
Bank did its job and processed the payment, why should they be liable for all these?
If anything, your example is an illustration why those "protections" should be abolished.
Because if the bank broke their legal obligations to the customer and the consumer had to use a attorney to recover their money, the attorney deserves to get paid.
Banks are expected to know their customer and to take measures to prevent fraud, rather than watching money go by and shrugging because they made a few nickels.
Externalizing all the risk out to the individual customers doesn't seem like a preferable system. Banks have done a whole lot of work to make the risks associated with this manageable and even profitable.
Consumers are safer, and also it is more reasonable to trust the payment system to have safe outcomes. As a result it is used more, and banks make more money.
the bank is not required to process transactions for an impersonator. the opposite in fact, it's supposed to filter out the fraudster's transaction! even if his password leaked, none of that matters. the transaction is valid only between the bank and the individual, any failure in communication between those two is the bank's problem, it just depends on how loud the scammed consumer is willing to be.
in China today there are people in Henan province that had their money completely stolen from their accounts... by the bank owner! and who's responsible? the central bank of course, and they will all be repaid, and very fast now because they protested very very loudly
https://www.bloomberg.com/news/articles/2022-07-21/china-to-...
people should not have to protest for fairness, the money should have never left their accounts, the system should have been perfect
src: software engineer designing fintech systems
I’m a litigator. The system is defined. The law is defined. I just operate within it.
Those types of questions/concerns are well addressed to your Congressperson. I’m merely letting folks know what the system is.
I don't agree with the parent commenter, but I find this view to be widely held among lawyers, and I find it distasteful.
A good way to respond to the question: why should banks be subject to this risk? Because ultimately leaks like the one described shouldn't happen, the people affected by them should be swiftly made whole, and it's not hard to see that banks are in a better position to ensure this happens than the individuals themselves.
Just because from the consumer's perspective the bank "covered" the losses, there's no reason the bank should be understood to be forced to just eat those costs. If a company like crypto.com is ultimately liable, then the bank can more effectively pursue action, whether there was 1 person affected or if N of their customers suffered losses. In the event that there were multiple customers affected, those losses can be consolidated, and the bank can pursue the ultimately liable party to recover the costs that the bank had to (temporarily) foot the bill for. They're frickin' banks.
By putting the onus on the legal system it allows merchants to commit smaller scale fraud more easily because normal people don't have lawyers on hand and aren't willing to do so for a $30 case of fraud, as justified as it may be.
In my experience, insurance adjusters are completely oblivious to the distinction here—that there are your company's rules, and then there's the rule of law, i.e. something bigger than you or your boss or your boss's boss, etc.
Insurance carriers especially benefit greatly from the misconceptions held by those in their workforce (and who end up seeding public perception with the same errors), even when they're pretty easily shown to contradict the law. It's almost certainly intentional.
So now vendors can keep auto billing with dark patterns such as unnavigable automated phone lines, and visa is going to take their side? (because the merchant will have proof of billing history?)
I hope Amex doesn't adopt these rules. I am going to think strongly about canceling my visa cards as a response.
Bitrix24 a SaaS crm/VoIP service was the worst abuser I can recall (kept randomly reappearing a $10.00 months after id asked visa to block them). Free Trial My ass.
Aside: One of the best things about AMEX is their customer support around chargebacks and I agree I hope they stay super friendly to this.
Other card: I returned an item, with proof of delivery via UPS tracking. Never got a refund. Opened a dispute. Weeks later, the dispute was resolved in the merchant's favor despite the merchant providing nothing as evidence except the original receipt. I had to call the help line, deal with several uncomprehending service reps until one of them re-opened the dispute, asking me to resubmit the same documents I submitted the first time! Finally the dispute was resolved in my favor a month later.
Amex: I ordered some items from a local store to be delivered and the order was cancelled without my money being refunded. I received an email with a few questions, which I answered. A few weeks later the dispute was resolved in my favor.
I still need to carry another card because some merchants don't accept Amex, but I use the Amex for everything I possibly can. I'm giving up some cash back rewards to do so, and I'm also paying an annual fee, but that's a small price to pay for getting better service when something goes wrong.
Share that with Visa and see if that changes their opinion on the chargeback.
Be polite, not emotional. Don’t threaten a lawyer or use any language you’d see on a TV legal show. If you’re in California feel free to cite their violation of this law [1]. Don’t threaten to sue. Don’t threaten a lawyer. Just mention that you have the right and you can’t use the UI as expected. If it’s bad you can say something like “if this isn’t resolved I may avail myself of other options afforded by $LAW”. Don’t specify what, don’t threaten they’ll regret it. Just let them know you are someone who is serious and non emotional.
“Company X,
I have tried to cancel this service but I am unable to due to X. After talking with CS they said it was due to $Bug. I talked with $Person at $Date. Let this serve as a formal notice that I will no longer be paying for service and no longer wish to be charged. I will be instructing Visa to reject further charges after $new_future_date.
Please Acknowledge Reciept of this notice.
Signed Person.
Todays Date is X”
https://techcrunch.com/2018/07/04/californias-new-online-can...
Customer support will be (/is) trained to never say such a thing, then.
Also, you are normalizing the idea that customers can be forced to jump through arbitrary hoops; you've just invented one yourself. I'd much rather have this behavior be illegal (see recent FTC ruling).
Illegal or not, it happens and my comment was what to do if/when it happens. The parent was someone complaining that they had a “billing bug” that they tried to charge back.
I wish everyone was nicer to consumers and not shareholders, but if you want your money back while you petition for new laws. sometimes you have to jump through hoops.
I think a certified mail to legal of the company (and a reasonable period of time for them to correct) is probably a good start.
If they actually tell you the bill was a mistake, that should definitely be proof.
The scam was that you'd book a cancellable room and the hotel would cancel your booking after they accepted it due to "unavailability of the room" (wtf), then rebook an identical "alternative" room "at the cheapest rate" which happens to be an uncancellable room at $1 less.
Why? Because they are impossible to find. No taxi driver can find them. Maybe don't exist. By the time you find this out you can't cancel the room.
If Visa ends up crippling this ability there's no chance I'll use their cards again.
Curious how this makes other options more competitive. If liberal dispute policies are one of the value props of using a CC, and merchants eat the fees, the value of using a CC declines if dispute resolution is tightened up making it closer to parity of irreversible funds transfers (although there is still the float component not yet solved for in the financial UX of most financial service providers).
Just yesterday, a guest called and asked to return 3rd night stay because it was more than the 2nd night room rate. Guest booked the room online and had a confirmation email with a daily rate, signed a physical registration card that shows daily rate during check in but insisted that we are overcharging him. He thretened us with a chargeback.
I returned the money because fighting chargeback is a losing battle for us.
They booked 8 rooms as a group, and I basically told him, that they are not welcome here next year and he should explained that to his group why we won't let them stay. Also told him, I am going to call everyone in his group and tell them not to book at our location.
---
A couple weeks ago, bank called and wanted to verify the charge. Bank wanted to know if the charge was valid. I told them it was charged through chip reader, and I have a video of the guest using the card. She is like, thats all I need. I m going to deny the chargeback.
A lot of guest book room, and when they forget to cancel they use chargeback.
From a customer perspective, it feels like a stingy, one-sided relationship with all the hidden fees for what should be a relatively simple arrangement.
Still not defending your idiot customer who couldn't be bothered to read the presumably clear and well-intentioned agreement they signed.
A lot of reasons but mostly due to demand and supply. We are mostly busy on the weekends (Fri/Sat). Weekends rates will be higher than weekdays. If the majority of the rooms are booked 6 months in advance, rate will be higher for those days. Not having enough housekeepers to clean the rooms, increase the rate so that we have less rooms to clean.
> Hotels have also been quick to adopt the nickel-and-dime-customers-to-death business strategy
I would say, not really. Look at the hospitality reits. They have lowest returns compare to other reits.
I see a sign on the Taco Bell advertising a $4 per hour premium ($21 per hour) for people who are willing to work late night and will stay to close the place up. I see a possibility of restaurants charging more for food at 11pm rather than 1pm. Which already happens at many places via discounts for “lunch specials” available only during noon hours.
Same reason for hotels to charge different prices for different nights.
You can throw in price discrimination / price segmentation and collect different prices from different people for the room night. Similar to how retail businesses give a lower price to people willing to spend their time finding coupons.
On the other hand, my Discover card has been my go to for as long as I've had a card.
They are using Patriot Bank out of North Dakota as an intermediary. Previously Privacy.com would directly debit from your checking account. In the new process you are signing up for a credit card with Patriot Bank under the hood. They pass on your checking account info to Patriot Bank and somehow money gets exchanged. I don't fully understand the process and don't trust men-in-the-middle like this.
I wasn't satisfied with the information I got from Privacy.com customer service. Has anyone researched this and confirmed there are no shenanigans in the new process. I used to use Privacy for many years but stopped because of this.
New process: Me -> Privacy.com -> Patriot Bank credit account -> My checking account.
My concern is I am forced to sign up for Patriot Bank credit services. Also Patriot Bank gets my checking account information.
I'd be a little concerned about them knowing about pretty much all of my purchases, though, and how they handle that data, and what they do with it, so more research required...
Hmm, also it sounds like they charge fees when your funding source is a "real" credit card, and not a bank account. That isn't really useful for me, as I rely on credit card rewards for a bunch of stuff, and I imagine the fees they'd charge would wipe out those benefits. But this could certainly be useful for buying something from a one-off merchant where I'm not sure if I can trust them, and in that case the free plan should be enough.
https://www.capitalone.com/digital/eno/virtual-card-numbers/
I, for one, am very happy to see Visa taking steps against this. We've kvetched for years over how how much power payment processors have in the system and now they're finally doing something about it (themselves, to boot!).
The reference points to a marketing newswire that also states "More than two in five (42%) of surveyed consumers who have filed disputes did so due to true fraud—e.g., unauthorized purchases made with their payment information." https://www.globenewswire.com/news-release/2021/12/15/235295...
Going deeper the actually 75% comes is stated on this PDF which links (sources) from a company that sells... sells dispute charges services. https://pages.sift.com/rs/526-PCC-974/images/ebook_Sift_Q4_2...
Others things to note: No statement by Visa in decreasing taxes on chargebacks to merchants.
For now this works because for some reason relatively few cardholders are educated enough on what are and how to use chargebacks.
I personally wouldn't be using credit card if not for the chargebacks. I am still paying off entire balance every month, but I am much happier knowing that any dispute on a transaction with a credit card is going to be so much easier than any other form of payment.
Chargebacks mostly fell into two categories: those who didn't recognize the business's name or financially unstable customers who charged back because they ran out of money at the end of the month and wanted to get some back (sometimes every month).
I guess it helped it was a low risk industry selling a service that can't be resold as only dumb criminals would use stolen credit card information to pay on an account with their name on it.
Going deeper the actually 75% comes is stated on this PDF which links (sources) from a company that sells... sells dispute charges services. https://pages.sift.com/rs/526-PCC-974/images/ebook_Sift_Q4_2...
So, to be clear, a non-impartial actor is providing the “data” justifying the anti-consumer activity. I’m shocked!
I mean, I think we've all dealt with the "WTF is SQ *SMTHNSMTHN on my credit card statement?" issue. If credit cards just showed actual merchant names it would reduce a lot of these problems. Granted, there are some issues with privacy (e.g. most companies know you don't want to see "Butt Plug Emporium" on your CC statement so instead show "A Plus Billing"), but even then I think that issue is solvable.
I was all ready to dispute, but then checked my Apple wallet, and I saw the charge at Allen Edmonds. Yeah Allen Edmonds truncates it’s online orders to “ae.com”
Someone might be reading this and think “you couldn’t remember where you spent $1000 just a week ago“. But I was genuinely flummoxed. I’m sure some psychologist can explain it, but if you had just asked me where I spent $1000, I probably would have remembered. What threw me was the “ae.com” representation. It wasn’t so much that I forgot where I spend money, but a certainty that I did not spend money at AE.com. But I really should reach out to Alan Edmonds and tell them to fix this.
They don’t even say “ae.com shoes” literally the entire description was “ae.com”
I could also see my wife making the purchase. A few weeks later, as I’m reconciling our statements, I see a transaction from American Eagle and ask her about it. She reasonably denies it, and has no reason to even consider that I might actually be talking about her Alan Edmonds purchase. I dispute the transaction online, and probably end up getting a new credit card issued because our old one seems to be compromised.
That's the problem here; ambiguous transaction descriptions. Sure, you don't buy clothes, so you aren't confused by an Allen Edmonds purchase being marked as American Eagle on your statement. But this can happen in many, many domains.
I guess if you're making $1M/year your threshold is different but I feel like larger enough transactions should still register.
On that note... Why can't customers cancel a chargeback as easily as they can create one? The whole system is a UX nightmare for all parties involved.
Still will cost money though, particularly those paying EDI/VAN data-rates.
Instead of Bob's Bagel Company, it's 1132 Fifth LLC, and only after a bunch of googling do you happen to hit upon a corporate database and discover the LLC is for a restaurant.
Merchants shouldn't even be allowed to set this field. It should be set by their merchant bank, and the bank should require that the name on a reader at a business location match the common name of the business, followed by their address or store number if it's a chain, and zipcode. Ideally the business phone number as well. Or there should be a merchant ID, cross-referenceable against a publicly database maintained by credit card companies.
I think you're missing the point. The entire point is you don't know whom the merchant is when see SQ *SMTHNSMTHN.
I literally had that exact problem myself before. [1] I called every entity that I could possibly imagine calling, including my card issuer itself, to try to figure out whom the merchant was. Nobody could tell me. I therefore disputed a charge. Only after I incurred another instance of the same charge did I figure out what merchant was generating that name. I had to call my issuer and let them know to cancel the dispute.
[1] With a different processor than Square.
Moreover phone numbers are not common. And I'm not sure what you call store IDs but the ones I recall frequently have no way to look them up. Instead of phone numbers what you frequently see is a city and state. In fact I just went to double-check one of my cards right now to make sure, and exactly 0 of the 8 transactions on it had phone numbers. (This may differ by card issuer.)
The problems:
* Not everyone has it set up correctly, either inadvertently,or as an attempt to disguise questionable transactions. * Ir's a cramped field at best, so you may end up with UNRDBL ABREVS. * Some space gets burnt with payment aggregatoer/gacilitator IDs (the "SQ" part of the example.
A lot of this stuff is remarkably underused. There's Level 2/3 data, a very detailed interface to document individual receipt line items-- but it's typically only used for corporate cards. So even if someone bothers to configure their shopping cart to correctly populate it (often ignored, since most carts prioritize "we support 2340 different payment platforms, at a minimal level" over offering all bells and whistles, the consumer still won't see the info that would help say "oh, SQBLABLABLABLA was where I bought the blue widgets."
I get notifications for every transaction, notifications before the bill is due, and when you view a transaction it shows you the merchant name, location, a brand photo, Apple Maps link if applicable, and all other transactions you’ve made with that merchant.
It is honestly a huge convenience. I never need to go line-by-line through my credit card statement to verify charges, because every time there's a charge, I get a push notification and, as a backup, an email.
There was just fraud on one of my cards a few weeks ago, and I knew immediately because of the push notification. Plus, Chase flagged the 2nd fraudulent charge attempt and sent me another push notification and a text message.
Square was able to show me GPS data for where the merchant was, and I figured out it was a good truck that put an extra zero in there for a $200 lunch.
So I agree it should be much more clear and transparent.
I can think of multiple times I've seen a credit card charge with an absolutely inscrutable "merchant" field, and the only way I've determined where it came from was to search my email for the charge amount.
And then you have the problem of aggregators like Square (your example), where they have their own prefix, and then apparently do a pretty bad job of making sure their merchants pick reasonable names. And then there are regular merchants who use their company name, which might be wildly different from the name of the store.
I do wonder how much "friendly fraud" is just someone looking at an inscrutable charge description on their statement, having no idea what it is, and disputing it on those grounds, even when it was a valid charge.
> "With this change, if merchants can provide additional data or evidence to show that the disputed charge is valid, then the dispute will be invalid."
I've seen (from the merchant side) unfair chargebacks. No question.
But my fear is that Visa is going to implement this something like YouTube copyright claims, where basically, the merchant just has to respond and that's it.
The last chargeback I issued was for an electronics seller who never credited me for a return. I explained the issue to American Express' automated system. Uploaded receipts (including the seller's return instructions, and delivery confirmation of the returned item), and got an instant refund.
I'd love to know how Visa's changes will affect this type of chargeback. It's wasn't "fraud" in the sense that someone used my credit card without authorization. But it certainly was a merchant that didn't follow up on their end of the deal.
>With this change, if merchants can provide additional data or evidence to show that the disputed charge is valid, then the dispute will be invalid.
>This change will empower merchants to protect themselves against first party misuse by enabling them to submit additional evidence that a purchase was indeed legitimate and authorized by the cardholder in order to stop the dispute claim. Additional examples that can help identify that a purchase is legitimate include a customer using the same payment credential previously at the merchant, login credentials, proof of use of a product and more.
This GREATLY weakens consumer protections for basically no upside by enabling bad actor merchants. End of story.
This is a cleansing process.
This "stolen" sounds like it might be a different kind of false claim.
Can consumers operate while maintaining impeccable high ground?
I for one am appalled that visa is making merchant fraud easier, making payments less controlled by cardholders.
I've heard banks tell me "well, you signed a contract with them, so we need to let the charges go through", or the "for your convenience"...
No, my bank has a fiduciary duty to me. If blocking a charge causes me to get into conflict with the merchant, that's between the merchant and I - my bank shouldn't be taking any "side" (and if they do, it should be mine).
"30 days before your subscription expires, teamviewer send you a friendly email to remind you to that your subscription expires in 30 days and to be sure to renew before then in order to not lose service. What that email does not tell you is that unless you cancel your subscription at least 30 days (ie on that very day) before your sub expires they will renew you automatically and demand a full year's subscription under threat of legal proceedings..." - https://news.ycombinator.com/item?id=32164897
It's even worse than this——"reputable" merchants will start acting even worse.
Here's an experiment you can do right now: go to WSJ.com and buy a subscription (instant). Now try to cancel. No button to do so. So start a Support Chat. Clearly type that you want to cancel. You are directed to call a phone number. So now you have to spend anywhere from 5 - 60 minutes on the phone. I tried to do a charge back on my Amex after I experienced this, and was denied.
This is the Wall Street Journal doing dark patterns and getting away with it. Imagine what will happen if credit card companies make it easier for merchants to do stuff like this.
Yup, every gym and pest control company just got aroused thinking about all the recurring charges they could now slip in.
Consider the phrasing "first party" instead of "cardholder", to make it less obvious who they're referring to.
It's not obvious to me that your credit card processor should be forced into dispute resolution in lieu of small claims courts... but if they are being asked to serve that function, then it's reasonable to request evidence from the merchant before rendering a decision based on your accusation.
The goods were not delivered and the vendor kept their money anyway. How is this okay?
As the previous comment said, this belongs in small claims court, not chargebacks.
What I'm saying: adjucating these situations is the purview of a justice system (ie courts). If you were ripped off, you can always go after the party that caused damages (ticket issuer). If you want a "short cut" to "justice" provided by a credit card processor, well then they get to decide when & how -- and I don't think it's unreasonable for them to collect "evidence" from both parties to make more-informed decisions. And again, if you dislike their rulings you always have small claims court at your disposal.
For example, I am an attorney who practices in the space, and I recently filed a dispute with my credit card. In response to my dispute, which I supported with a sworn affidavit, the retailer responded with a blatant, demonstrable lie. They said I never contacted them. Of course, they messed with the wrong person, and I responded with additional evidence and substantiation. I am confident I will win. But most consumers are not going to be able to execute on a dispute the same way that I did. Most consumers just get screwed by the lie. And that’s under the CURRENT system. So now we’re making it even easier for them to lie and screw over customers. Great
I think the system could benefit from tightening and more fair procedures. Simply having a more consumer-oriented system doesn’t solve the problem, and leads to overall higher prices that get built into products.
Chargebacks are a nightmare for small businesses. We never win, even when we should. Customers keep the items they ordered, and get their money back. How is this okay?
Punishing honest consumers is not the right way to go about this.
This change by Visa is going to be abused by big merchants who have legal teams draft up bullshit blanket responses to scare consumers and then exit pre-arbitration. Since the cost to arbitrate is $400 minimum, it’s difficult for consumers to go through with it.
Note that Visa is citing a report by Sift, who is a YC company that is one of the worst data brokers out there. They were extremely non-CCPA-compliant as Jason Tan found out the hard way: https://www.nytimes.com/2020/01/15/technology/data-privacy-l...
“Login credentials” and “proof of use” are obviously vague statements, but hopefully require something very specific. If someone acquires my credit card, sets up an account on a service, and uses that service, it doesn’t make it any less fraudulent.
You said the quiet part out loud here, VISA.
If their subscription has gone unused so long that they've forgotten about it, it's pretty clear they wouldn't keep paying for it if they knew. There's certainly no intention to defraud here on the part of the customer, if they've forgotten about it - arguably, if the merchant should reasonably know that the customer has forgotten about the subscription, they're the one acting at least unethically (consider "has not logged into the service for 2 years").
You could drastically reduce the number of these particular disputes by requiring recurring subscriptions to be actively acknowledged by the customer eg. every 12 months.
I think it is okay for Visa to come up with a policy which disallows disputing a long unused subscription. User subscribed to the subscription, forgot about it, did not check their card statement for a while to know that they were being charged for it and then asked for a chargeback (presumably because the merchant denied them a refund). This is not Visa's problem.
One scenario where Visa should still allow chargebacks - a user tried to cancel the subscription, have proof they tried to, but the merchant is still charging them.
Now, should the merchant auto-cancel unused subscription? Hell, yeah. But, we should not blame Visa for coming up with a policy that does not allow such chargebacks.
Merchants don't just have to deliver, they have to service their customers according to contract and consumer law. If something breaks or is otherwise faulty and the merchant blanks you, a chargeback is the correct next step. Nothing seizes attention like money being pulled out of your account.
There absolutely is fraud, and hats off to Visa noticing that mere trillions of dollars later, but they shouldn't allow merchants to skate by on proof of physical delivery.
> Those ramifications for merchants include losses that can be up to double the original transaction amount and increase a merchant’s chargeback ratio, which can impact their business and their bottom line.
I wish it were only double.
On a $50 digtal purchase, Stripe will charge you $1.75 in transaction fees but losing a dispute costs you the $1.75 in addition to a +$15 dispute fee that Stripe charges. Even if you can prove that the customer used your product with tons of usage logs and you even have a log of emails where the customer is asking questions that can only be asked if they used your product chances are you'll lose the dispute because most card vendors want to keep customers happy even if it means screwing a small business.
Fully agree with your final sentence though, some card processors rule against the merchant regardless of evidence supplied. It makes the whole process pointless. It's actually simpler to take a customer to small claims court than defend a chargeback, and at least the court will look at the evidence. Such a waste of resources, sadly.
TFA is saying Visa is amending their chargeback policy to empower merchants to continue billing people for long-forgotten subscriptions.
I'll not be using my Costco Visa card for anything other than Costco gas purchases from here on out. Visa is making their position clear; anti-consumer, anti-little-guy, pro-ripoff.
I guess I’ll just open and close online checking accounts giving 30-day windows for online purchases using a debit card.
After 30 days the debit card will no longer be valid, linked to a closed account, and cannot be charged recurrently.
These sort of schemes will probably make chargebacks harder to use than just closing the account that would do the billing. If the card is leaked/frauded than you’re already legally protected. If you just want to avoid the act of cancelling an account you opened… then you’re playing into the arms race that is making these things harder.
> but first party misuse, which can account for up to 75 percent of all chargebacks, is when a cardholder disputes a legitimate purchase that they intended with their issuer. This includes customers refuting valid purchases such as long-forgotten recurring subscriptions
If you agree to a purchase, and sign up for something re-occurring, you’re committing to it. You have to tell the business to stop charging you, you can’t just stop paying.
Tbh I’ve never experienced this much failed cancellations so i don’t know for sure but there was a HN post about how easy arbitration was so honestly could be a good avenue. Or talk to your attorneys general
Yes, please Mrs CEO, tell me more about small businesses... I think I hurt myself rolling my eyes at this.
This will primarily used by larger companies to fight legitimate chargebacks. If they had a reason to dispute the chargeback there are already means to do it, this process already exists. I can't imagine this new "program" is anything more than a way to screw consumers more.
What is extreme about that?
The chargeback process needs to evolve wherein consumers actually abusing it lose, and businesses abusing consumers lose. Regardless it shouldn't cost a business anything if they WIN.
There are numerous stories in this thread alone about businesses continuing to charge people after cancellation and other good-faith interventions. Visa as essentially saying they won't help in those cases since the business can prove a pre-existing relationship. That's not ok.
Heck, maybe we need a kind of "unsubscribe" mechanism from Visa's side. Something that isn't a chargeback (which they'd reserve for actual fraud) but a mechanism where a vendor just cannot charge that card anymore without getting a NEW agreement/contract.
99% of the chargebacks we see are first party fraud. We lose these disputes even after providing evidence. We've found and submitted Instagram posts of the customer wearing the item they claim to have "not ordered" or "never received". We've had customers communicate with us how much they "love" the item after receiving it, only to file a first party fraud related chargeback months later. No matter what evidence we provide, they always side with the customer.
I don't know what world people are living in, but as a business we have never won a chargeback dispute.
Maybe he's new?
edit: I see you edited your phrasing to make it nicer, but... It looks like the dude posted under his real name (with a handle that he uses many other places).
This is the kind of story that gets picked up by HN first and then ends up published in mainstream media the following week.
Anyhow, I don't defend cardholder fraud, and at the same time I've been ripped off too many times by merchants. They tend to err on the side of themselves, perpetually fleecing masses of real-life flesh and blood human beings.
@mlyle: I appreciate you taking the time to dig into it more and raise the controversy to my attention. This is a helpful way to be, you are great.
Everyone (retailers, consumers) unhappy with the chargeback system. Honest merchants lose lots of money all the time. It can be difficult to make a chargeback for many kinds of dark patterns (e.g. subscription traps). The fact that everyone's mad makes me think it may not be too tilted against any party, but one would hope it could work better overall.
> @mlyle: I appreciate you taking the time to dig into it more and raise the controversy to my attention. This is a helpful way to be, you are great.
I have a hard time with benefit-of-the-doubt here and get reprimanded a fair bit. :D Just doing my best to improve things where I can.
"A good compromise leaves everybody mad" - https://www.gocomics.com/calvinandhobbes/1993/05/01
It is more likely that most of the comments are from consumers that (secretly) actually do chargeback fraud themselves and have not run a small business and also want merchants, and businesses like yourself to lose all the time. I see it in digital subscriptions, influencers doing it and even users trying to lie their way into getting the service or product for free and the chargebacks hurt both the consumer and the merchant.
It is indeed an important issue that must be tackled.
*sigh* I think this is also unfair and presumes bad faith.
Both honest consumers and honest merchants have a lot of reasons to feel aggrieved about how chargebacks are handled... and reasons to fear it getting worse.
The worst of the dishonest of each lot have figured out how to tilt the current system to their favor, and may be quite happy with the status quo.
I suspect most people think a chargeback dispute is a carefully and fairly adjudicated process, where both sides are heard equally and an evidence based decision is made. From my experience, this is not the case.
As a customer, want to win a dispute 100% of the time?
Here are a few claims that always work: 1. I didn't make the purchase 2. I didn't receive the item 3. The item doesn't "match the description"
Regardless of evidence (eg. signature delivery with ID check), we have never won a dispute in these cases.
We just want the dispute process to be fair - and hopefully this change by Visa gets closer to it.
IMHO, the whole CC business reeks. Visa and MasterCard are so big, the top brass have little or no incentive to care about the individual cardholders or the small businesses who rely on them to push transactions through fairly. The entire thing is perverse, and the real human beings at the ends suffer the consequences of the executives' ambivalence to reality.
The thing that's always a problem: the bad actors get lots of practice at being bad.
The individual honest consumer who needs to chargeback or the innocent merchant who's getting scammed is doing something they only do rarely, and so they're bad at it.
The scammer customer or the subscription-fraud-dark-pattern merchant has honed their practices to win chargebacks.
It really seems like there should be some heuristics applied to the consumer: if some significant percent of transactions (either number or dollar amount) are charge-backs, something is probably wrong that warrants closer investigation.
Someone filing one chargeback per every thousand or more transactions is not trying to scam anyone. Someone who charges-back 50% or more of the transactions they make at online clothing merchants, on the other hand, definitely is.
I wonder if there's just no incentive for the card issuers to do this?
Fortunately, I had counter-proof that the proof they supplied was invalid. I won the dispute in the end.
Under this new policy, it seems my chargeback would have been denied without coming back to comment … am I reading this correctly? If so, then this is one major reason now for me not to use Visa in future.
The primary benefit of credit card was the included consumer protection. If that is gone, credit card will stop being as beneficial.
> Those ramifications for merchants include losses that can be up to double the original transaction amount
Is there a better argument for this that they're failing to make here?
Because if I take this at face value, I feel like if your business is racking up so many of these charges that it's affecting its bottom line, maybe it suggests your business is itself the problem? Why is your business surprising customers with charges if it's actually providing them with something of value? Doesn't it sound like your business relies on tricking people into forgetting to cancel subscriptions in that case?
Incredible quote, Mike must be the smartest guy in the whole company!
Bullshit. If that were true, card providers in the USA would be using chip-&-PIN the way the rest of the world has been for 10 years or more. We finally JUST got cards with chips in them... which are largely neutered by the idiotic continued use of SIGNATURES (or nothing).
sounds like BS. if it's because a child made the purchase or they forgot to cancel subscription, why don't they deny the claim? it's not like every dispute claim has to approved.
this is akin to Visa and other credit card providers removing price match policy for purchases (up to n days from purchase date). one of the issuers said they are removing it because no one uses them. BS. if no one uses them, why not keep it for 1% of users who benefit from it?
I logged a support request asking for a refund. The franchise owner called me and said since the order came from the McDonald's mobile app he is unable to refund me --- he said, please file a chargeback instead.
This was under $5 and was auto approved by Chase as a courtesy credit but I wonder if, in the future, the fact that I've used the card in the McDonald's mobile app in the past means it would be auto denied?
Second, how does this not weaken the rights of the card-holder?
> This change will empower merchants to protect themselves against first party misuse by enabling them to submit additional evidence that a purchase was indeed legitimate and authorized by the cardholder in order to stop the dispute claim. Additional examples that can help identify that a purchase is legitimate include a customer using the same payment credential previously at the merchant, login credentials, proof of use of a product and more.
So, for the 80% of the cases (based on Visa's own data citation in the article) where there was a legitimate chargeback, the third-party perpetrator of the fraud just has to use the product which perhaps shows up as "evidence" to the merchant that could be used to deny the chargeback. This somehow reeks of nonsense and is just a weakening of the cardholder's rights and protection of their credit/reputation.
The chargeback "defence" or "arbitration" system for both parties is a joke, that's the real problem that is being glossed over here. And that includes systems with decent UX (eg. stripe).
As a merchant, if a user puts in a fraudulent chargeback, you can currently defend it with all the evidence / proof in the world - and the card issuer can still process the chargeback. The incentives are aligned for them to do that in fact.
As a consumer, chargebacks are an incredibly important mechanism. But equally the evidence you provide is normally just for the card provider. That information is never passed onto the merchant, just the high level "category" of the chargeback. The merchant has to guess at what actually went wrong, or reach out to the customer and ask them to provide all the same information over again. If a user made a genuine mistake (eg. Didn't recognise the transaction), there is no "cancel" button. There is a whole convoluted process for withdrawing a chargeback. The saving grace for consumers is that card issuers just tend to side with the end-user. The merchant is left clueless as to what the user's real issue was.
But the unspoken downside is that these cases end up in small claims courts, that are a drag on the court system, and potentially end up with the end user having a court judgement against them because they provided some misleading information and didn't realise the consequences.
There has to be a better system - I'm just not sure this change is it. It just shifts the category of fraudulent chargebacks to a different one.
While Visa is a card network, Amex is both a network and an issuer. Visa works with issuing banks like Chase, so as a Visa cardholder, you would interface with the bank rather than with Visa when reporting an unrecognized charge.
Given that Amex is an issuer, I could imagine that there might exist more incentives to side with the cardholder versus a merchant for disputes, as compared with a company that operates as a network but not directly as a card issuer.
I suspect it was because I still have another card with Amex, and I'd bet that canceling it won't be as easy, but regardless kudos to Amex.
?? What?
The credit card systems today don’t produce much evidence—what are they referring to here?
We had 100 BigMacs before the charge and afterwards we had 99?!?
Are they rescinding the “liability shift” rule?
Here in France (and generally, the EU) your interlocutor is a bank that happens to deliver VISA or Mastercard cards.
If something is wrong, you contact your bank which is obligated to give you back the money and then does an investigation afterwards.
I do not care about their (VISA) internal regulations or decisions, I am a customer of a bank and the bank has obligations towards me, by law.
How the bank deals with that vs VISA is not my problem, not are any VISA regulations, fees, whatever.
What is Visa doing to protect the consumer in this case? Auto-renewals should always be explicitly opted-in by the cardholder.
Yes, this is a problem and so many merchants are getting their accounts and funds locked up by being unable to fight these friendly fraud disputes that have been taken advantage of by the consumer.
This sort of fraud hurts both the consumer and mostly the merchant as the bank which doesn't know any of the context of the payment takes 3 seconds to see the dispute and 98% of the time, the merchant loses and the bank forcibly takes the money away and gives it back to the customer, especially for digital subscriptions. Instead the consumer should contact the merchant directly to resolve the dispute.
At least VISA knows it is a problem. What is Mastercard doing about this?
Hahaha. Have you tried this recently? I had a company ship us defective baby food with broken seals. They said they couldn’t refund but they were happy to ship us a replacement. When we said we wanted a refund instead, they said “whoops we already shipped it”. It arrived with more broken seals. I issued a chargeback. Got my money instantly.
Some merchants are bad. Visa’s whole value to me is that they insure me against these situations.
I have seen many have dared to do this with digital purchases and subscriptions. For instance many have tried to services from Sony, Nintendo, Microsoft, Amazon etc and as soon as the customers got their money back, 99% they were crying and complaining that their accounts got locked and banned immediately and lost all their digital purchases due to that chargeback dispute they filed against them.
As for the merchants using Shopify, PayPal or Stripe, the moment a merchant receives tons of fraudulent chargebacks from consumers, they also start crying here on HN about their accounts and funds getting locked.
So over time, the merchants will edit their refund policies to make sure that it will be even harder to get a refund next time and put in place whatever chargeback protection systems that the payment providers have in place for these merchants hence why it hurts both of them.
What an amazing number, wonder where that came from ;)
Now let's compare that figure to the amount stolen yearly by unethical merchants :)
Just in case you likely haven't finished reading it, I will give you a hint before you start: Try looking at the 'references' at the bottom. ;)
It's not that hard if you have read it in its entirety rather than directly replying to my comment. :)
I agree, for the cases where this is reasonable. Unfortunately plenty of companies engage in extremely bad faith efforts to make it absurdly hard to cancel a service or resolve an issue. My concern is that these sorts of companies are the ones that will benefit from this change. An ethical company that makes it easy to understand charges, cancel services, or handle issues probably gets far fewer chargebacks than one that makes cancelling as painful as possible. Visa does have a financial interest in processing more charges, so I wouldn't automatically assume good faith on their part.