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CoverStory

Card brand rules require speedy resolution of disputed transactions, as do sev- The threat to gas stations is concern-
eral consumer credit laws, like the Fair Credit Billing and Truth-in-Lending ing enough that Visa issued a pair of
acts. Disputes can fall into any one of four categories: 1. Outright fraud; 2. Au- security alerts in December 2019. The
thorization failures, where the merchant failed to follow acceptance rules; 3. alerts pertained to ongoing threats
Processing errors, in which a transaction is not properly documented by a mer- posed by skimmers, as well as by
chant; or 4. Customer disputes that can arise, for example, because the consum- organized gangs engaging in "more
er doesn't' recall the purchase, or the purchase doesn't meet their expectations. technically advanced threat cam-
paigns" infiltrating the POS systems
Historically, chargebacks have represented about four to six basis points of the of non-EMV-compliant gas-stations
total value of transactions, or about $209 billion of the $4.18 trillion in sales that and pilfering card data. "[T]he recent
are expected to be rung up on credit cards this year, according to Mercator's attacks display a continued interest
projections. But that number is sure to rise as more cash transactions migrate in obtaining track data from targeted
to cards, the consultancy noted. brick-and-mortar merchants," Visa
warned.
Chargebacks related to ecommerce and other card-not-present transactions
have already shot up, largely due to the implementation of EMV security at Gas stations were given five addi-
brick-and-mortar establishments. The lone holdout in the move to EMV – pay- tional years to comply with changes
at-the-pump gas stations – also have become favored targets for fraudsters. to EMV rules that required all other
"There's a lot of fraud going on at gas pumps," said Suresh Dakshina, founder brick-and-mortar businesses to use
and president of Chargeback Gurus. EMV chip readers or assume liability
for any resulting fraud. That grace
Card skimmers are a big problem, as the devices are easy to install at unat- period ends this October. The impe-
tended pumps. The U.S. Secret Service said its agents seize about 20 to 30 card tus for gas stations to comply is that
skimmers a week, primarily from gas stations. Skimmers aren't the only fraud fraudsters will continue to target
threats at gas stations, however. One chargeback scam Dakshina has seen in- magnetic stripe readers to compro-
volves a driver paying at the pump for $20 in gas, then turning around and mise to perpetrate card fraud as long
doing it again using the same credit card (but perhaps with a second car) at the as the readers continue to exist, Dak-
same pump, then disputing the second transaction as a duplicate. shina said.

Visa introduced a service called Visa
Transaction Advisor, which allows
gas stations to tap into Visa's global
risk intelligence network and can
determine the risk of a transaction
within milliseconds based on card-
holder and fraud trends. The service
is available through acquirers, or di-
rectly through Visa for large gas sta-
tion chains.
Putting a price on the problem
The true cost of chargebacks to mer-
chants is much greater than the data
might indicate. It includes time spent
dealing with chargebacks, non-re-
fundable chargeback fees (assessed
by acquirers whenever merchants in-
cur chargebacks), and the potential of
being deemed a "high risk" merchant,
which pushes up total cost of accep-
tance.

"Depending on the complexity, a
dispute of a $10 item can require the
same resolution effort as a dispute of
a $1,000 item," Mercator noted in its
recent Chargebacks and disputes: strate-
gic solutions report.

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