If the customer or issuing bank alleges that the merchant has violated Visa and MasterCard Operating Rules then it is considered “Out of Compliance” and the merchant will not be protected by the chargeback process. The issuing bank must certify that a financial loss did or will occur as a result of the rule(s) violation. Each side has an opportunity to present their case to the Visa and MasterCard Analyst assigned to the case. Compliance cases are filed within 90 days (Visa) and 180 days (MasterCard) from the transaction date. The date of a Retrieval Request ( the date of violation) is 90 days for Visa and 45 days for MasterCard from the date the issuing bank received notice from its cardholder of a violation (Date of Discovery)
Examples of Chargeback Compliance violations include:
- Failing to properly disclose “limited refund” or “return policies” to the cardholder at the time of the transaction.
- Preparing two or more transaction receipts to avoid authorization for a single transaction.
- Quality of service received from a travel and entertainment merchant.
Chargeback Compliance Filing Procedures, Fees and Penalties:
If you, the merchant, face a Compliance Violation claim, then you will be required to complete a Visa and MasterCard Compliance form and provide a description of the grievance, and submit copies of all supporting documentation. The issuing bank is required to provide the merchant with a Pre-Compliance letter, 30 days prior to filing, in attempt to settle the matter. As with a standard Arbitration, there is a Filing fee of $150.00, a Review fee of $250.00 paid by the losing party. Further, a $100.00 fine may be assessed for each technical violation found against the opposing party.
Criteria used for Chargeback Compliance Violation Decisions:
The arbitrator will consider the following when determining financial liability ~
- Was there a rule violation and a resulting financial loss
- Was the cardholder’s complaint reasonable
- Should the disputed amount be allocated between the two parties
When facing a Chargeback, Arbitration or Compliance claim keep in mind…
When a merchant is facing a Chargeback claim, Arbitration request or Compliance Violation charge, the most important thing to remember is to respond quickly and accurately with sufficient supporting documentation to defend your business. Failure to respond by the stated deadlines is an automatic forfeiture of the transaction which means you will lose the full transaction amount and could be subject to fines.
For more information on chargeback compliance please call (800)917-8026.