Visa has recently introduced a significant update to its dispute program, targeting the growing issue of first-party fraud, commonly known as “friendly fraud,” in card-not-present transactions. This rule change is poised to bring substantial benefits to merchants by equipping them with enhanced tools to establish the validity of disputed charges. The ramifications of this update are extensive, with the potential to save businesses billions of dollars on a global scale over the next five years, while strengthening the consumer-merchant ecosystem.

The Challenge of Friendly Fraud

Friendly fraud, defined as customers disputing legitimate transactions and securing refunds while retaining the purchased goods/services, has emerged as a pressing issue in recent years. Businesses find themselves susceptible to this type of fraud, which can have dire financial consequences, potentially jeopardizing their ability to sustain operations. Given the rising prevalence of digital transactions, the demand for a robust solution to combat friendly fraud has become more urgent than ever.

Visa’s Response

In response to this challenge, Visa unveiled a new dispute process on September 28, 2023, specifically tailored to address card-not-present transactions entangled with friendly fraud. This update equips merchants with additional tools and a standardized framework to demonstrate the validity and authorization of disputed charges. As stated in Visa’s press release, these enhancements are projected to yield cost savings for businesses exceeding a billion dollars over the next five years.

The revised dispute program empowers merchants by enabling them to provide evidence that establishes a historical footprint of the relationship between cardholders and merchants. This evidence plays a pivotal role in validating the legitimacy of transactions, thus safeguarding the rightfully earned revenue of businesses. By anonymizing and sharing this data, merchants can effectively prove the intent behind a disputed charge, a critical aspect in distinguishing legitimate transactions from fraudulent ones.

The Impacts

These changes will substantially impact the dynamics of interactions between merchants, issuers, and consumers within the payments ecosystem. The shift of the burden of proof onto the merchant to provide evidence places the liability squarely on the issuer. If merchants can supply the required evidence, customer claims will be denied, creating a shift in the issuer-cardholder relationship, where issuers face heightened scrutiny in evaluating friendly fraud claims and responding appropriately.

Furthermore, both investigation and call center procedures will necessitate updates to ensure standardized approaches, prompt responses, and precise information collection. Ultimately, the reduction of friendly fraud benefits all stakeholders within the payments ecosystem by enhancing efficiency and fostering trust.

Visa’s proactive response to the challenge of friendly fraud marks a significant stride in the protection of merchants and consumers alike. By providing merchants with a clearer pathway to validate disputed charges, the payments ecosystem becomes more secure and efficient. This update holds the potential to save businesses billions of dollars, strengthening their financial stability and enabling them to thrive in an increasingly digital world. Visa’s unwavering commitment to reducing all forms of fraud while empowering merchants underscores the company’s dedication to safeguarding the integrity of the payments system.

In conclusion, as businesses navigate the ever-evolving landscape of digital transactions and the challenges of friendly fraud, it is imperative to collaborate with a credit card processor experienced in handling transactions specific to the moving and storage industry. This partner should be well-prepared to assist you effectively, particularly when encountering chargebacks.

At Remedy Payment Solutions, we take pride in serving over 1,200 movers nationwide and are renowned for our Chargeback Concierge service. We are dedicated to helping our merchants combat and implement measures to reduce chargebacks through education on best practices. If you seek more information or assistance, please do not hesitate to reach out to us by emailing or calling 714-461-2200. Your financial security and success are our utmost priorities, and we are here to support you every step of the way.

Remedy is powered by Chosen Payments whom is a registered ISO and FSP of Wells Fargo Bank, N.A., Concord, CA and BBVA USA, Birmingham, AL., and Elavon, Inc., N.A., Atlanta, Georgia, and Evolve Bank & Trust; Memphis, TN., and Merrick Bank, N.A., Draper, UT.