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Visa Updates to Chargeback Dispute Rules Regarding Compelling Evidence Take Effect in October

The world’s largest card brand announced the second phase of updates, new rights and options for merchants as it pertains to chargeback representment and compelling evidence. The concept of compelling evidence was first introduced in 2013 to expand the types of documentation merchants could use to dispute chargebacks, while the next phase of updates, which continue to focus on eCommerce and digital goods, will go into effect on October 17th.

Many merchants have October 1st marked on their calendars, the date when the EMV liability shift occurs in the United States, but October 17th is an important date as well. While the EMV liability shift date marks the beginning-of-the-end of the mag-stripe era and represents the transition of more fraud attempts to the Card Not Present channel, beginning October 17th merchants will have more rights and resources for disputing chargebacks in this channel with the latest updates regarding Visa’s chargeback dispute rules and compelling evidence.

Visa’s first phase of revisions to their International Operating Regulations for retrievals and chargebacks took effect in April, 2013 and introduced compelling evidence, which was defined as “providing proof the cardholder participated in the transaction, received the goods or services, or benefited from the transaction.” This identified specific examples of evidence or documentation that could be provided to dispute certain chargeback reason codes, and when provided would require the card issuer to acknowledge and address the merchant’s rebuttal to the chargeback. MasterCard and Discover additionally added compelling evidence to their chargeback dispute policies and guidelines, and while there are differences between the examples and applicability of compelling evidence between the card brands, compelling evidence primarily applies to Goods/Services Not Provided chargebacks (such as Visa reason code 30), Defective/Not as Described chargebacks (such as Visa reason code 53) and fraud related chargebacks (such as Visa reason codes 81 and 83).

The addition of compelling evidence was a win for merchants, who had expressed frustrations with often having no recourse to dispute and defend against friendly fraud. The first phase of updates and addition of compelling evidence to Visa’s dispute resolution process recognized the need to expand the definition of acceptable dispute evidence as more transactions are conducted remotely and can involve intangible goods or services. Merchants were then able to rely on the IP address, email address, phone number and other information related to Card Absent transactions, as well as specific documentation related to digital goods, MOTO, and buy-online-pickup-in-store transactions.

The Visa dispute resolution updates scheduled to take effect October 17th expand on compelling evidence further, especially as it applies to digital goods. One major benefit for merchants is an increase in what is required of issuers when a merchant has provided compelling evidence. For representments submitted after this date, issuers must both certify that they contacted the cardholder to review the merchant’s compelling evidence, and provide an explanation of why the cardholder is continuing the dispute (if the dispute is continued).

While the Visa chargeback reason codes that pertain to compelling evidence are staying the same, the types and examples of acceptable compelling evidence per reason code is expanding to cater even more to eCommerce and digital goods. For example, Device ID information can now be included as compelling evidence in addition to the IP address and email. Specifically for digital goods and services, Visa defines 6 types of compelling evidence of which at least two must be provided.

Merchants should read and become familiar with the scheduled Visa dispute rules updates such that the benefit of new types of compelling evidence and issuer requirements can be leveraged beginning October 17th. A copy of the Visa release explaining these changes is included below, and organizations seeking to better manage chargeback representment in-house should also consider relevant online training programs from The Fraud Practice such as our eCommerce Chargeback Professional Certification and our newest training course, Successful Strategies for Chargeback Representment, which is up-to-date with the Visa changes schedule to take effect in October.

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