Chargeback Management

Visa lowers Chargeback & Fraud Thresholds - VFMP & VCMP

Visa Tighten

Visa continues to make changes to its risk monitoring programs, announcing recently plans to toughen qualifying thresholds for the Visa Chargeback Monitoring (VCMP), and Visa Fraud Monitoring (VFMP) programs on October 1, 2019.

Visa fraud monitoring program

New call-to-actionThe Visa fraud monitoring program (VFMP),  monitors US-based accounts for signs of high levels of chargeback fraud. There are some key things to remember but let's begin with what Visa has to say on the matter in their public rules document.

"Visa monitors Merchant Outlets that generate an excessive level of fraud through the Visa Fraud Monitoring Program (VFMP).

Visa will identify a Merchant Outlet under the VFMP standard program if it meets or exceeds any of the following monthly program thresholds:

Both:
– USD 75,000 fraud amount
– Effective through 30 September 2019 1% fraud-dollar-to-sales-dollar ratio
Effective 1 October 2019 0.9% fraud-dollar-to-sales-dollar ratio"

When a merchant meets any of Visa's predetermined criterion, the acquiring bank is notified and given 10 days to notify the merchant. 

From there, a merchant and their acquiring bank will have approximately one month to research them source of the fraud and submit a fraud remediation plan to Visa. Once you've been able to keep your fraud levels down for 3 months, you will be eligible to exit the Visa Fraud Monitoring Program.

"Visa may require the Acquirer or its Merchant to deploy appropriate fraud remediation tools or
technologies to address unusual activity in the individual cases identified through the VFMP.
A Merchant Outlet will exit the VFMP if it is below the program thresholds for 3 consecutive
months."

Visa's Fraud Monitoring Program isn't something merchants can be enrolled in indefinitely. There is a very real limit to how much time merchants are allotted while in the Visa Fraud Monitoring Program.

12 months after the initial notification, if your fraud levels have not been dramatically reduced, Visa will evaluate your merchant account for "disqualification."

In other words, you will no longer be able to process transactions with Visa. 

Knowing this, some merchants first thought is a band-aid approach. Things like, slightly changing the name of their store to avoid detection. Let me stop you right there though...

Do NOT under any circumstances attempt to bypass the VFMP.

If you do this, and Visa finds out, one or both of two things will happen.

  1. Visa will fine you per-month, per-outlet
  2. Permanently disqualify the merchant and its principal owners from the Visa Program.

So if you've found yourself enrolled in VFMP, you've probably been aware of the fraud for a while and maybe you haven't had a chance to address it. That's perfectly fine.

Use this time, the tools provided to you and the knowledge of your acquiring bank's team to begin fighting back against the fraudsters attacking your livelihood.

Visa Chargeback Monitoring Program

The Visa Chargeback Monitoring Program (VCMP) also has monitoring and  remediation components, but focuses on chargebacks, rather than fraud. 

Download the eGuide, 4 Reasons to Hire a Chargeback Management CompanyWhen a merchant reaches Visa's predefined Early Warning threshold of 0.65%, Visa asks the merchant and their acquirer to identify the "root cause" of the merchant's chargeback issues. Once the chargeback sources have been properly identified, the merchant and acquirer will develop a thorough chargeback-reduction strategy (aka chargeback mitigation plan) and submit it to Visa for approval. 

What the Changes Mean to Merchants

Visa's aim in implementing these new thresholds for the Visa Fraud Monitoring Program and the Visa Chargeback Monitoring Program is two fold:

1. Protect Visa and their constituents by mitigating risk.

2. Ensure that merchants' are using ethical sales tactics, and that transactions are processed, and data stored, on PCI compliant systems. 

Merchants with chargeback and fraud mitigation strategies already in place are unlikely to be affected, but those without them will be at greater risk of entering one or both of the programs, resulting in higher fines and administrative costs.

VCMP & VFMP: Before and After

Here are the pre-Q3 2019 Visa Fraud Monitoring Program and Chargeback Monitoring Program limits, and the ones that take effect at the start of Q3 2019.

Visa Fraud Monitoring Program (VFMP)

Before October 1, 2019

As of October 1, 2019

Standard Program

  • USD 75,000 in fraudulent transactions AND
  • 1.0% fraud:sales ratio (dollars)
  • USD 75,000 in fraudulent transactions AND
  • 0.9% fraud:sales ratio (dollars)

Excessive Program

  • USD 250,000 in fraudulent transactions AND
  • 2.0% fraud:sales ratio (dollars)
  • USD 250,000 in fraudulent transactions AND
  • 1.8% fraud:sales ratio (dollars)

Visa Chargeback Monitoring Program (VCMP)

Before October 1, 2019

As of October 1, 2019

Low Risk Program

  • 100+ dispute count
    AND
  • 1.0% dispute:sales ratio
  • 100+ dispute count                         AND
  • 0.9% dispute:sales ratio

High Risk Program

  • 1000+ dispute count
    AND
  • 2.0% dispute:sales ratio
  • 1000+ dispute count
    AND
  • 1.8% dispute:sales ratio  

 

Of course, the best approach to staying within the threshold is to put the right tools and strategies in place to prevent chargebacks from happening in the first place.

Thanks for following the Chargeback Gurus blog. Feel free to submit topic suggestions, questions or requests for advice to: win@chargebackgurus.com

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