I am a consumer protection attorney who does work advocating for individuals with credit card and debit card disputes.<p>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.<p>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.<p>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.<p>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.
One thing that people need to be aware of, is that Visa does not get to set all of the rules for chargebacks and disputes. You have dispute/chargeback rights that are secured by federal law. They are not as comprehensive as Visa, but in some ways they can be stronger. The problem is there are very few attorneys who practice in this area. I know, because I’m one of them. But some of these protections have Real teeth.<p>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.<p>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.<p>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
This is awful.
I've canceled subscriptions so many times only to get billed again, and again, blabla "it's a bug in the billing system" run around.<p>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?)<p>I hope Amex doesn't adopt these rules. I am going to think strongly about canceling my visa cards as a response.<p>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.
Be aware that "When most people think of fraud, they think of stolen account numbers or identity theft, but first party misuse, which can account for up to 75 percent of all chargebacks[1]" looks like marketing spin.<p>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."
<a href="https://www.globenewswire.com/news-release/2021/12/15/2352951/0/en/Report-Consumers-Admit-to-Submitting-False-Fraud-Disputes-to-Get-Their-Money-Back.html" rel="nofollow">https://www.globenewswire.com/news-release/2021/12/15/235295...</a><p>Going deeper the actually 75% comes is stated on this PDF which links (sources) from a company that sells... sells dispute charges services.
<a href="https://pages.sift.com/rs/526-PCC-974/images/ebook_Sift_Q4_2021_Digital_Trust_Safety_Index_Digital_Fraud_and_Disputes.pdf" rel="nofollow">https://pages.sift.com/rs/526-PCC-974/images/ebook_Sift_Q4_2...</a><p>Others things to note: No statement by Visa in decreasing taxes on chargebacks to merchants.
Was hoping that they would address one big contributor to friendly fraud, which is that credit card descriptions are so ridiculously inscrutable that a cottage industry of fintech startups has emerged <i>just to translate these ridiculous codes into something a human can understand</i>.<p>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.
There's a tremendous amount of devil in the details of how this is implemented:<p>> "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."<p>I've seen (from the merchant side) unfair chargebacks. No question.<p>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.<p>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.<p>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.
Many commenters in this thread seem to be against this change, but looking at the article they seem... pretty reasonable?<p>>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.<p>>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.
<i>This includes customers refuting valid purchases such as long-forgotten recurring subscriptions...</i><p>You said the quiet part out loud here, VISA.<p>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").<p>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.
Troubling to see Visa lumping a lot of behaviours together, and suggesting it the only legitimate use for chargebacks are second or third party fraud.<p>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 <i>and the merchant blanks you</i>, a chargeback is the correct next step. Nothing seizes attention like money being pulled out of your account.<p>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.
From the article:<p>> <i>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><p>I wish it were only double.<p>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.
Do we really need to further "empower" merchants?<p>TFA is saying Visa is amending their chargeback policy to empower merchants to continue billing people for long-forgotten subscriptions.<p>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.
Considering temporary card numbers like privacy.com are also getting harder to use…<p>I guess I’ll just open and close online checking accounts giving 30-day windows for online purchases using a debit card.<p>After 30 days the debit card will no longer be valid, linked to a closed account, and cannot be charged recurrently.
> “Reducing the impacts of first party misuse on small businesses requires industry-wide support,” says Julie Fergerson, CEO at MRC<p>Yes, please Mrs CEO, tell me more about small businesses... I think I hurt myself rolling my eyes at this.<p>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.
As someone with an online business, I welcome this.<p>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.<p>I don't know what world people are living in, but as a business we have never won a chargeback dispute.
No matter what country I am in and whether they had consumer affairs ombudsmen, filing a chargeback dispute with the merchant (in my case Visa) was the best protection I ever got from dodgy vendors charging me after I cancel a subscription or fail to provide the agreed upon services. Even the hint that I am going to do it usually gets the vendors to act and quickly. I hope that this doesn't go away.
As a customer who has had to go through the chargeback process (against a well known furniture company), the company provided what they felt was “proof” of the charge being valid.<p>Fortunately, I had counter-proof that the proof they supplied was invalid. I won the dispute in the end.<p>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.
> This includes customers refuting valid purchases such as long-forgotten recurring subscriptions, or children given access to use their parent’s card to make purchases with parental approval.<p>> Those ramifications for merchants include losses that can be up to double the original transaction amount<p>Is there a better argument for this that they're failing to make here?<p>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?
> “Friendly fraud is not always friendly, especially from a merchant’s perspective,” said Mike Lemberger, Senior Vice President of North America Risk at Visa.<p>Incredible quote, Mike must be the smartest guy in the whole company!
"At Visa, our goal is to reduce all types of fraud in the ecosystem"<p>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).
> When most people think of fraud, they think of stolen account numbers or identity theft, but first party misuse, which can account for up to 75 percent of all chargebacks1, 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, or children given access to use their parent’s card to make purchases with parental approval.<p>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.<p>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?
Where's our right to get out of unwanted subscriptions more easily? They're disputed because that's the easiest way out sometimes! Marking the dispute as "leave existing charge, deny future charges" would be more consumer friendly.
McDonald's didn't have the item I ordered for my kids and wouldn't give me a replacement or a refund.<p>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.<p>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?
First, the term "friendly fraud" sounds terrible; First-party fraud at least conveys the meaning clearly without the marketing dressup.<p>Second, how does this not weaken the rights of the card-holder?<p>> 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.<p>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.
Firstly, I assume this only impacts chargebacks that come under the "fraud" category. Where a consumer just tells their card issuer "it wasn't me", but in fact it was them. Ok great...<p>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).<p>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 <i>can still process the chargeback</i>. The incentives are aligned for them to do that in fact.<p>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.<p>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.<p>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.
Perhaps this explains the rise in American Express's stock price today. Amex has perhaps the best customer service I've experienced (maybe that says more about me than them :).<p>While Visa is a card network, Amex is both a network <i>and</i> 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.<p>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.
> “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.”<p>?? What?<p>The credit card systems today don’t produce much evidence—what are they referring to here?<p>We had 100 BigMacs before the charge and afterwards we had 99?!?<p>Are they rescinding the “liability shift” rule?<p><a href="https://squareup.com/us/en/townsquare/liability-shift" rel="nofollow">https://squareup.com/us/en/townsquare/liability-shift</a>
As a subscription vendor, I can tell you I have never found or achieved the level of evidence required to successfully dispute a chargeback. I don't even bother anymore. This seems like a welcome change of attitude.
I wonder how much of this is in reaction to people doing chargebacks on transfers to failed crypto exchanges (which apparently people have been doing) ...
I am not sure I understand the problem. Why is everyone telling about VISA? Do you deal directly with VISA?<p>Here in France (and generally, the EU) your interlocutor is a bank that happens to deliver VISA or Mastercard cards.<p>If something is wrong, you contact your bank which is obligated to give you back the money and then does an investigation afterwards.
I have been hit many times with unintended auto-renewal. The merchant hides a clause in terms & conditions that the subscription will be auto-renewed upon expiration, then at the end of the year, wham! you get hit with an unexpected charge. Then you have to call the merchant to cancel, be on hold for 30+ minutes, the whole rigmarole.<p>What is Visa doing to protect the consumer in this case? Auto-renewals should always be explicitly opted-in by the cardholder.
> A recent study by SIFT found that nearly one in five consumers who have filed a chargeback dispute have committed first party fraud by submitting false claims in order to get their money back on legitimate purchases. In fact, according to the NRF, the losses from friendly fraud totals over $25 billion a year.<p>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.<p>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.<p>At least VISA knows it is a problem. What is Mastercard doing about this?