MAG Insights

Over the past year, there has been a lot of buzz around the new compelling evidence programs introduced by multiple card brands which allow merchants to adjudicate first-party fraud chargebacks for eCommerce or card-not-present disputes. These programs allow merchants to use data elements within the transaction—matched with the same data elements from previous, undisputed transactions—to prove cardholder involvement. But did you know most card brands also have rules for handling disputes, which allow for compelling evidence outside of these programs?

Aside from Visa's CE3.0 and Mastercard's First Party Trust programs, the major card brands have rules that identify what evidence merchants can use to prove cardholder participation in transactions later disputed as fraudulent. That’s the good news. However, the rules vary by card brand and, in some cases, vary by transaction use case or industry, which can be challenging for some merchants to decipher what evidence is eligible for use in every circumstance. As its first initiative, the Fraud COP set out to better understand these rules and their application within various merchant industries and verticals. To do this requires open and transparent working sessions with the card brands. To date, we've met with Mastercard to collaborate and share feedback on their rules. Since that session, they've introduced several beneficial rule updates that clarify or extend their compelling evidence rules, which went into effect this past April. The subset of Fraud COP members will also meet with American Express in the coming weeks.

In April, Visa introduced their new Acquirer Monitoring Program (VAMP) which replaces several of their former fraud and dispute monitoring programs. This led the Fraud COP to review our Merchant Reference Guide entitled Network Fraud & Chargeback Programs Overview. The original guide was published in 2020, and while it seems a simple task to update one section, it's proven more difficult than planned. The primary reason for this is that the program has undergone multiple iterations, and information available through public sources contains multiple contradictions. Additionally, we learned that more changes are coming to this new program in June and are awaiting confirmation of what exactly those changes are. Once we're able to confirm the program calculations, thresholds, and related fine structure, we'll finalize the updates to this guide.

Before standing up the Fraud COP, we surveyed our members to determine their biggest pain points. The next two high priority items on the list focus on account takeover (ATO) fraud mitigation and refund fraud. Once the Fraud COP is ready to move on to their next item, we will survey the COP members again to ensure we're focusing on the highest priority of the larger group. The Fraud COP will focus attention on multiple areas before disbanding and will likely exist for at least another year, so there is still time to get involved. If you're interested in contributing to the success of this group, feel free to reach out to Kelly Andrus to learn more.

In addition to the Fraud COP’s activities, in February, Mastercard launched a new working group to review ways to mitigate both returns fraud and refund fraud, and they solicited member companies to participate alongside issuers, acquirers, and other merchants. They hosted a series of working meetings, where pain-points were prioritized, and gaps in data, processing, and deterrence were examined. They are now working on potential solutions to quell the prevalence of both types of fraud through a pilot with stakeholders across the ecosystem. Our group also collaborated with Mastercard on the development of their First-Party Trust program, which launched last year. We appreciate their commitment to collaborative solutions to common problems.

We continually incorporate feedback from our merchant members, some of whom have recommended additional conference content on fraud. To this end, our May webinar (watch on demand) presented by Forter and Snipes highlighted how to beat fraud and abuse while safeguarding the customer experience. And our upcoming MAG Payments Conference 25, at the JW Marriott in San Antonio, TX, will include seven (7) breakout sessions with fraud-centric topics. Registration will open soon, and we look forward to seeing you there!