Skip to content

Restitution for Protecting Customer from Fraud

Answered by: 

Question: 
Our financial institution issues the VISA check card to our customers. We have had fraud issues that VISA denies us charge back rights on. They are protecting the merchants and the ones committing fraud but what about the cardholders and card issuers? Shouldn't VISA reimburse us for this loss? How can a FI get restitution for the money they lose when protecting their customers against fraud?
Answer: 

As a VISA issuer, you are bound to follow VISA operating rules which assign liability for fraudulent charges based on the situation. There are specific instances where VISA will allow an issuer to recover losses due to fraud. For stolen cards you may recover from the merchant who failed to compare the signature on the sales receipt to the signature on the card. You must recover the stolen card and file a compliance case against the merchant. For internet based fraud, if you lose the initial chargeback, and merchandise was shipped to an address other than the billing address on the card, you can use the arbitration process to continue the dispute and recover the funds. Finally, for Account Data Compromise Events resulting in counterfeit card activity, VISA will assess if a violation of its operating rules has taken place, evaluate all resulting counterfeit fraud issues reported to the Fraud Reporting Service, and issue both operational and fraud related reimbursement.

VISA's ultimate goal is to maximize usage of its network. Placing liability on merchants will result in them not accepting the VISA brand. Placing liability on the cardholders will result them not using their debit cards. Either scenario results in less interchange income for you. Ultimately the institution can continue to operate under VISA's rules, or discontinue its card program.

First published on BankersOnline.com 7/4/11

First published on 07/04/2011

Banker Store View All

From training, policies, forms, and publications, to office products and occasional gifts, it’s available here:

Banker Store

hot right now

image description

Looking for effective, convenient training on a particular subject?

BOL Learning Connect offers more than 200 courses ON-DEMAND or on CD ROM from AML to Reg Z and every topic in between.

Search Topics