CHARGEBACK INSURANCE

Bachelor of commerce

Banking and insurance

Semester VI

(2008-2009)

Submitted by

Amrin Anwar Fodkar

Roll no: 106.08

________________________________________________________________________

S.I.E.S (Nerul) COLLEGE OF ARTS, SCIENCE

&COMMERCE

Plot 1-c sector V, Nerul, Navi Mumbai-400 076

CHARGEBACK INSURANCE

Bachelor of commerce

Banking and insurance

Semester VI

Submitted

In Partial Fulfilment of the requirements

For the Award of Degree of Bachelor of

Commerce-Banking & Insurance

By

Amrin Anwar Fodkar

Roll no 106.08

__________________________________________________________________________

S.I.E.S (Nerul) COLLEGE OF ARTS, SCIENCE

&COMMERCE

Plot 1-c sector V, Nerul, Navi Mumbai-400 076

S.I.E.S(Nerul) COLLEGE OF ARTS,SCIENCE &

COMMERCE

Plot 1-c sector V, Nerul, Navi Mumbai-400 076

CERTIFICATE

This is to certify that Miss. Amrin.A.Fodkar of

B.Com Banking and Insurance Semester VI (2008-

09) has successfully completed the project on

CHARGEBACK INSURANCE under the guidance

of Mr. PRAKASH.

Course Co-ordinator Principal

Project guide/Internal Examiner

External examiner

DECLARATION

I Amrin.A.Fodkar the student of B.com Banking &

Insurance Semester VI (2008-09) hereby declare that

I have completed the project on CHARGEBACK

INSURANCE.

The information submitted is true and original to the

best of my knowledge.

Signature

Amrin.A.Fodkar

Roll no: 106.08

CHARGEBACK INSURANCE

ACKNOWLEDGE

This project would not have been poss ible without the

support of many people . I would l ike to thank our

professor Mr.Prakash for being my internal guide and for

great support I would also l ike to thanks our col lege

l ibrary for providing books for this project with help of

these people I was in a posi t ion to complete this project .

The whole experience was a rewarding one especial ly in

terms of knowledge and information.

SUMMARY:

I t g ives me immerse p leasure of present ing my projec t . The

projec t i s according to the informat ion col lec ted by me

through the var ious s i tes and other sourse l ike

books ,magazine e tc . This projec t g ives a br ief knowledge on

my topic CHARGEBACK INSURANCE

For the first time in India, Standard Chartered and TATA AIG

General.Insurance Company Ltd and various other overseas companies bring

to you a service which guarantees you against credit card fraud!. This

service solves the problem of an individual’s responsibility for late

realization of her/his credit card loss. Presently, if somebody steals your

credit card and you realize it late, you are bound to pay for the delay in

reporting. However, this service has not only identified this problem, but

solved it altogether. Now, a credit card customer is insured against any

expenditure on his lost credit card made12 hours prior to reporting the loss.

We would learn more about this insurance in this project.

RESEARCH:

Research is conducted in two ways:

Secoundary research

Primary research

The information which is collected by visi t ings banks

or inst i tut ions or under the guide of any person is

primary research.

The information which is collected by reference of

books and through internet si tes is secoundary

research.

In this project I have use the secoundary source to

collect information on this topic I have done my best

to provide as much information I have got through

websites and books and also through my project guide.

Through chargeback insurance is not a vast topic I

havent use the primary source as I got enough

information through secoundary research.

INDEX:

1 . INTRODUCTION OF INSURANCE

2 . HISTORY OF INSURANCE

3 . PRINCIPLE OF INSURANCE

4 . INTRODUCTION:WHAT IS CHARGEBACK

5 . REASONS FOR CHARGEBACK

6 . FINALLY AN INSURANCE AGAINST

CHARGEBACK

7 . CHARGEBACK INSURANCE

8 . MERCHANT CHARGEBACK INSURANCE

9 . CREDIT CARD FRAUD

10. THE CHARGEBACK PROCESS

11. CHARGEBACK INSURANCE COMPANY:OMAN

INSURANCE COMPANY

12. FACTS OF CHARGEBACK INSURANCE ON

MERCHANT ACCOUNTS

13. CHARGEBACK INSURANCE ON PAYPAL

14. GOOD PAYMENT PROCESS:CHARGEBACK

INSURANCE

15. CASE STUDY ON CHARGEBACK

16 . CONCLUSION

CHAPTER 1: AN INTRODUCTION TO AN INSURANCE

Insurance is a cover used for protecting oneself from the risk of a financial

loss. It is important to understand that risk is a part of any person’s life and

that it increases as a person increases in age, responsibility and wealth.

Insurance is risk coverage against financial losses and should not be taken as

an investment instrument.

There are mainly two parties involved in this – the insurer and the insured.

The insurer is the insurance company who will provide the cover to the

insured against any financial losses. The insured may be an individual

person or a group of people like an employer, members of a society, etc.

A policy is the contract between the insurer and the insured, which states the

risks covered, the exclusions, if any, and the benefits reimbursed on the

happening of an event like death, illness etc. The policy is paid through what

is called a premium, which is a set amount that must be paid by the insured

on a monthly, semi-annual or annual basis. On the happening of an event

like death, disability, fire, etc, for which the insured is covered, the benefit

amount stated in the policy contract can be claimed by the insured.

The options for purchasing Insurance are plentiful with choices ranging

from choosing the Insurance Company, searching for an agent, deciding on

the deductible, amount of coverage, beneficiaries and dependent coverage.

Once you have a child the offers start pouring in on insuring your new

arrival. Does the child need a policy or can he or she be added to an existing

policy?

For couples planning on marrying they need to decide which Employer

offers the best coverage. When you merge your belongings into one

household as cohabitants the need for a renter’s policy, if one is not already

in place, becomes an issue. When settling into your new residence

immediately start photographing the big-ticket items, and create a notebook

recording the model and serial numbers. I prefer Analysis Pads that have

columns for easy record keeping. You can also keep this data on the owner’s

manual with all manuals in one location for easy access.

Several months ago my home was burglarized. I received from the Police at

victim supplemental property loss.The categories on this report include

quantity, article, serial number, brand, model number, miscellaneous

description – color, size, etc. and fair dollar value. I have been renting for

seven years a house that is a duplex and was not insured. I now have

Renter’s and earthquake insurance.

I learned while serving on a jury this summer that a robbery occurs with

force while a burglary is the unlawful entry of premises. It was alarming to

learn the number of members on the jury panel that answered yes to being a

victim of a crime. Not one of these crimes ended with the capture of the

culprit. This is another reason why insuring one’s property is a must in this

dayandage.

When a family member turns 15 or 16 in most states they are eager to obtain

a driver’s license or student permit. A few months before this event takes

place the family needs to look over their automobile policy and make

changes to the coverage to cover the additional driver in their household.

On some policies when a child turns the legal age of eighteen they may no

longer qualify to be on their parent’s insurance policy. If the graduate is

going onto college the health and auto policies need to be consulted to

determine coverage options.

With many Insurance companies you have the option of paying the entire

premium in one payment, or make monthly payments. You can have the

payments deducted from your checking account or pay at your agent’s

office, mail in a check to the company or use their automated telephone

system and perhaps even pay online.

Classification of insurance

There are mainly two broad classes of Insurance – Life and Non Life.

Life insurance products include Term Life policies, which give a pure

risk coverage of only the death benefit, whereas endowment or money

back policies have a risk as well as savings component i.e. death as

well as maturity benefit. Also coming under the life insurance

umbrella are the Unit – Linked Policies in which there is a risk

component and a savings component, which is invested in equity, debt

or gilt funds, depending on the insurance company.

Non Life insurance products include property or casualty, health

insurance or house, fire, marine insurance etc. This insurance class

deals with all the non-life aspects of an insured like his/her house,

health, land, office, cargo, etc which might bring financial loss.

WHY IS AN INSURANCE NECESSARY?

The question contains the answer within itself. After all, life is fraught with

tensions and apprehensions regarding the future and what it holds for the

individual. Despite all the planning and preparation one might make, no one

can accurately guarantee or predict how or when death might result and the

circumstances that might ensue in its aftermath.

We are not saying that life and existence are constantly fraught with danger

and uncertainty. But then it is essential that you plan for the future. The

chances for a fatality or an injury to occur to the average individual may not

be particularly high but then no one can really afford to completely disregard

his or her future and what it holds.

People generally regard insurance as a scheme when and where you have to

lose a lot to gain a little. Nevertheless, insurance is still the most reliable tool

an individual can use to plan for his future.

CHAPTER2: HISTORY OF INSURANCE IN INDIA:

Insurance in India has its history dating back till 1818, when Oriental Life

Insurance Company was started by Europeans in Kolkata to cater to the

needs of European community. Pre-independent era in India saw

discrimination among the life of foreigners and Indians with higher

premiums being charged for the latter. It was only in the year 1870, Bombay

Mutual Life Assurance Society, the first Indian insurance company covered

Indian lives at normal rates.

At the dawn of the twentieth century, insurance companies started

mushrooming up. In the year 1912, the Life Insurance Companies Act, and

the Provident Fund Act were passed to regulate the insurance business. The

Life Insurance Companies Act, 1912 made it necessary that the premium

rate tables and periodical valuations of companies should be certified by an

actuary. However, the disparage still existed as discrimination between

Indian and foreign companies. The oldest existing insurance company in

India is National Insurance Company Ltd, which was founded in 1906 and is

doing business even today. The Insurance industry earlier consisted of only

two state insurers: Life Insurers i.e. Life Insurance Corporation of India

(LIC) and General Insurers i.e. General Insurance Corporation of India

(GIC). GIC had four subsidiary companies.

With effect from December 2000, these subsidiaries have been de-linked

from parent company and made as independent insurance companies:

Oriental Insurance Company Limited, New India Assurance Company

Limited, National Insurance Company Limited and United India Insurance

Company Limited.

Related Acts

The insurance sector went through a full circle of phases from being

unregulated to completely regulated and then currently being partly

deregulated. It is governed by a number of acts, with the first one being the

Insurance Act, 1938.

The Insurance Act, 1938

The Insurance Act, 1938 was the first legislation governing all forms of

insurance to provide strict state control over insurance business.

Life Insurance Corporation Act, 1956

Even though the first legislation was enacted in 1938, it was only in 19

January 1956, that life insurance in India was completely nationalized,

through a Government ordinance; the Life Insurance Corporation Act, 1956

effective from 1.9.1956 was enancted in the same year to, inter-alia, form

LIFE INSURANCE CORPORATION after nationalization of the 245

companies into one entity. There were 245 insurance companies of both

Indian and foreign origin in 1956. Nationalization was accomplished by the

govt. acquisition of the management of the companies. The Life Insurance

Corporation of India was created on 1 September, 1956, as a result and has

grown to be the largest insurance company in India as of 2006.

General Insurance Business (Nationalisation) Act, 1972

The General Insurance Business (Nationalisation) Act, 1972 was enacted to

nationalise the 100 odd general insurance companies and subsequently

merging them into four companies. All the companies were amalgamated

into National Insurance, New India Assurance, Oriental Insurance, United

India Insurance which were headquartered in each of the four metropolitan

cities.

Insurance Regulatory and Development Authority (IRDA) Act, 1999

Till 1999, there were not any private insurance companies in Indian

insurance sector. The Govt. of India, then introduced the Insurance

Regulatory and Development Authority Act in 1999, thereby de-regulating

the insurance sector and allowing private companies into the insurance.

Further, foreign investment was also allowed and capped at 26% holding in

the Indian insurance companies. In recent years many private players entered

in the Insurance sector of India. Companies with equal strength competing in

the Indian insurance market. Currently, in India only 2 million people (0.2 %

of total population of 1 billion), are covered under Mediclaim, whereas in

developed nations like USA about 75 % of the total population are covered

under some insurance scheme. With more and more private players in the

sector this scenario may change at a rapid pace.

Existing Insurance Companies/Corporations

1. Bajaj Allianz Life Insurance Company Limited

2. Birla Sun Life Insurance Co. Ltd

3. HDFC Standard Life Insurance Co. Ltd

4. ICICI Prudential Life Insurance Co. Ltd.

5. ING Vysya Life Insurance Company Ltd.

6. Life Insurance Corporation of India

7. Max New York Life Insurance Co. Ltd

8. Met Life India Insurance Company Ltd.

9. Kotak Mahindra Old Mutual Life Insurance Limited

10.SBI Life Insurance Co. Ltd

11.Tata AIG Life Insurance Company Limited

12.Reliance Life Insurance Company Limited.

13.Aviva Life Insurance Co. India Pvt. Ltd.

14.Sahara India Life Insurance Co, Ltd.

15.Shriram Life Insurance Co, Ltd.

16.Bharti AXA Life Insurance Company Ltd.

17.Future Generali Life Insurance Company Ltd.

18.IDBI Fortis Life Insurance Company Ltd.

19.Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd

20.AEGON Religare Life Insurance Company Limited.

21.DLF Pramerica Life Insurance Co. Ltd.

CHAPTER 3: PRINCIPLES OF INSURANCE:

Commercially insurable risks typically share seven common characteristics.

A large number of homogeneous exposure units. The vast majority of

insurance policies are provided for individual members of very large classes.

Automobile insurance, for example, covered about 175 million automobiles

in the United States in 2004. The existence of a large number of

homogeneous exposure units allows insurers to benefit from the so-called

“law of large numbers,” which in effect states that as the number of

exposure units increases, the actual results are increasingly likely to become

close to expected results. There are exceptions to this criterion. Lloyd's of

London is famous for insuring the life or health of actors, actresses and

sports figures. Satellite Launch insurance covers events that are infrequent.

Large commercial property policies may insure exceptional properties for

which there are no ‘homogeneous’ exposure units. Despite failing on this

criterion, many exposures like these are generally considered to be insurable.

1. Definite Loss. The event that gives rise to the loss that is subject to the

insured, at least in principle, take place at a known time, in a known

place, and from a known cause. The classic example is death of an

insured person on a life insurance policy. Fire, automobile accidents,

and worker injuries may all easily meet this criterion. Other types of

losses may only be definite in theory. Occupational disease, for

instance, may involve prolonged exposure to injurious conditions where

no specific time, place or cause is identifiable. Ideally, the time, place

and cause of a loss should be clear enough that a reasonable person,

with sufficient information, could objectively verify all three elements.

2. Accidental Loss. The event that constitutes the trigger of a claim

should be fortuitous, or at least outside the control of the beneficiary of

the insurance. The loss should be ‘pure,’ in the sense that it results from

an event for which there is only the opportunity for cost. Events that

contain speculative elements, such as ordinary business risks, are

generally not considered insurable.

3. Large Loss. The size of the loss must be meaningful from the

perspective of the insured. Insurance premiums need to cover both the

expected cost of losses, plus the cost of issuing and administering the

policy, adjusting losses, and supplying the capital needed to reasonably

assure that the insurer will be able to pay claims. For small losses these

latter costs may be several times the size of the expected cost of losses.

There is little point in paying such costs unless the protection offered

has real value to a buyer.

4. Affordable Premium. If the likelihood of an insured event is so high,

or the cost of the event so large, that the resulting premium is large

relative to the amount of protection offered, it is not likely that anyone

will buy insurance, even if on offer. Further, as the accounting

profession formally recognizes in financial accounting standards, the

premium cannot be so large that there is not a reasonable chance of a

significant loss to the insurer. If there is no such chance of loss, the

transaction may have the form of insurance, but not the substance.

5. Calculable Loss. There are two elements that must be at least

estimable, if not formally calculable: the probability of loss, and the

attendant cost. Probability of loss is generally an empirical exercise,

while cost has more to do with the ability of a reasonable person in

possession of a copy of the insurance policy and a proof of loss

associated with a claim presented under that policy to make a

reasonably definite and objective evaluation of the amount of the loss

recoverable as a result of the claim.

6. Limited risk of catastrophically large losses. The essential risk is

often aggregation. If the same event can cause losses to numerous

policyholders of the same insurer, the ability of that insurer to issue

policies becomes constrained, not by factors surrounding the individual

characteristics of a given policyholder, but by the factors surrounding

the sum of all policyholders so exposed. Typically, insurers prefer to

limit their exposure to a loss from a single event to some small portion

of their capital base, on the order of 5 percent. Where the loss can be

aggregated, or an individual policy could produce exceptionally large

claims, the capital constraint will restrict an insurer's appetite for

additional policyholders. The classic example is earthquake insurance,

where the ability of an underwriter to issue a new policy depends on the

number and size of the policies that it has already underwritten. Wind

insurance in hurricane zones, particularly along coast lines, is another

example of this phenomenon. In extreme cases, the aggregation can

affect the entire industry, since the combined capital of insurers and

reinsurers can be small compared to the needs of potential

policyholders in areas exposed to aggregation risk.

CHAPTER 4

INTRODUCTION: WHAT IS CHARGEBACK?

A chargeback is a reversal of a payment card transaction initiated by the

consumer who holds the card or the bank that issued the card used in the

purchase. This differs from a refund or "credit," which is agreed to and

initiated by the merchant at the point-of-sale. A chargeback usually occurs

when a consumer files a dispute with their bank or credit/debit card provider.

This can happen when a consumer discovers fraudulent or improper

transactions on their card statement or online account view. Consumers in

the U.S. who use credit cards are afforded chargeback rights under Federal

Reserve Regulation Z, which is made possible by the Truth in Lending Act.

U.S. debit card holders are guaranteed similar rights under Federal Reserve

Regulation E, which is made possible by the Electronic Funds Transfer Act.

Card networks enforce chargeback rights globally through their network

rules and regulations.

The card issuing bank will investigate disputes, and will "charge back" the

value of the original transaction directly from the merchant's acquiring bank,

which is obligated under card network rules to pay the card issuer. The

merchant's acquirer will then attempt to recover an equal value of the

chargeback plus a processing fee from the merchant's bank account.

Chargebacks are typically passed on to the merchant as a matter of acquirer

policy unless the merchant can prove the transaction was legitimate, or

goods and services have been rendered to a customer claiming otherwise.

Sometimes the consumer dispute is untrue, and their refund claim gets

denied. In these situations, the merchant will sometimes still be charged

processing fees.

In cases of credit card fraud, the merchant loses the goods or services sold,

the payment, the fees for processing the payment, any currency conversion

commissions, and the chargeback processing fee. For obvious reasons, many

merchants take steps to avoid chargebacks—such as not accepting

suspicious transactions. This may spawn collateral damage, where the

merchant additionally loses legitimate sales by incorrectly blocking

legitimate transactions.

There are other forms of credit reversals that may also be referred to as

chargebacks listed below.

A retrieval request is a "pre-chargeback" and a request for a merchant's

documentation of the transaction in question. Retrievals may also incur a

fee. Some providers charge $10–$50 and others do not refund this.

CHAPTER 5: REASONS OF CHARGEBACK:

Most chargebacks are initiated by the cardholder, who may contact his/her

card issuing bank regarding an inconsistency in his/her monthly credit card

statement. This begins the dispute process that may eventually lead to a

chargeback, and a reinstatement of credit to the cardholder's account.

One of the most common reasons for a chargeback is known as a fraudulent

transaction. A credit card is used without the consent or proper authorization

of the card holder. In some cases, a merchant is responsible for charges

fraudulently imposed on a customer. Mostly, fraudulent card transactions

originate with criminals who gain access to secure payment card data and set

up schemes to exploit those data.

Chargebacks can also result from a customer dispute over credit. This type

of chargeback is usually described as credit not processed. A customer may

have returned merchandise to a merchant in return for credit, but credit was

never posted to the account. In this example, the merchant is responsible for

issuing credit to its customer, and would be charged back.

Other types of chargebacks are related to technical problems between the

merchant and the issuing bank, whereby a customer was charged twice for a

single transaction (duplicate processing) or other various mistakes. Yet other

chargebacks are related to the authorization process of a credit card

transaction, for example, if a transaction is declined by its issuing bank and

the account is still charged.

Another reason for chargebacks is when a customer does not receive the

item they paid for. In this case, a chargeback is initiated and the payment to

the merchant is reversed.

List of reasons for a chargeback:

Card holder requests a copy of the transaction receipt.

Card holder did not authorize the transaction.

Non-matching account number.

Transaction was processed more than once.

Transaction receipt was not imprinted.

Refund not processed.

No authorization.

Customer never received merchandise/services.

Card not used within valid expiration date.

Services not rendered.

Error in transaction amount.

Transaction receipt is incorrect, incomplete, or illegible.

Transaction processed for incorrect amount.

Product different from what was described or promised.

Counterfeit transaction.

Transaction not processed within Visa or MasterCard time frames.

Failure to obtain card-holder signature.

Signature on the card was blank.

Signature on receipt different from card.

Card-holder claims merchant changed transaction amount without

permission.

Merchant knowingly participated in a fraudulent transaction.

Incorrect Transaction Date.

Card-holder claims invalid mail or telephone order transaction.

Card-holder was denied ability to return item.

Transaction was not canceled successfully.

Card-holder not satisfied with quality of product or services.

Debit-card holder's bank initially approves a transaction, but

subsequently returns the charge due to non-sufficient funds, an

account closure, or the bank "locking" the card due to a subsequent

unauthorized use, loss or theft of the card, or multiple unsuccessful

attempts to use it at an ATM.

Buyer's remorse

Buyer initiating a false chargeback after receiving goods or services;

this is considered fraud.

Handling chargebacks

A merchant is billed for chargebacks as they occur, along with other fees

and settlements associated with credit card acceptance. Because a merchant

may be charged back in error, and because chargebacks may often involve

complicated customer disputes, a chargeback may be appealed by the

merchant. This process varies by credit card. If the chargeback is found to

have been in error, the transaction will be "re-presented" and the merchant

will be granted a reversal.

Thieves occasionally abuse the chargeback system. For example, in a

"Friendly Fraud", an unscrupulous customer will make a purchase over the

Internet with his own credit card and then issue a chargeback once the

product or service is received. In such cases merchants can have difficulty

recovering payment.

Chargeback processing (handling) is complex as a result of frequent rule

changes by the major credit card companies (MasterCard, Visa, American

Express, etc.). There is an emerging market for business software that

simplifies the chargeback process as well as separate chargeback processing

services.

It is possible for the chargeback and associated fee to cause an overdraft or

leave insufficient funds to cover a subsequent withdrawal or debit from the

merchant's account that received the chargeback. This could cause pending

checks to be returned due to non-sufficient funds. Unless the merchant

detects the chargeback in time to cover pending debits, a snowballing effect

of penalties assessed could result.

Address verification also provides protection by partially verifying the

cardholder's address, however the cardholder's signature is most important.

Other types of chargebacks

Accounts may also incur credit reversals in other forms, such as these:

ATM reversal: An ATM deposit envelope is found to have less funds

than represented (if any) and a chargeback is made to correct the

error. This could result due to a counting error or intentional fraud by

the account holder, or the envelope or its contents could have been

lost or stolen. If an overdraft results and the amount is too high or

cannot be covered in a short period of time, the bank will sue or press

criminal charges, unless the account holder has been the victim of the

latter scenario, identity theft, or other fraud, and files a sworn police

report.

Bank error correction: A bank error credits the account with more

funds than intended and makes a chargeback to correct the error. If an

overdraft results and it cannot be covered in time, the bank could sue

or press criminal charges.

Direct deposit chargeback: A direct deposit is made to the wrong

account holder or in a greater amount than intended and a chargeback

is made to correct the error.

Returned check deposit: The account holder deposits a check or

money order and the deposited item is returned due to NSF, a closed

account, or being discovered to be counterfeit, stolen, altered, or

forged. This could occur due to a deposited item that he knows to be

bad, or he could be a victim of a bad check or a counterfeit check

scam. If an overdraft results and it is too huge or cannot be covered in

a short period of time, the bank could sue or even press criminal

charges.

CHAPTER 6:FINALLY AN INSURANCE AGAINST

CHARGEBACK.

Have you lost your credit card? Are you worried after reading about the

various cases of credit card frauds around you? Do you think twice before

using your credit card in a restaurant or a petrol pump?

For the first time in India, Standard Chartered and TATA AIG

General.Insurance Company Ltd bring to you a service which guarantees

you against credit card fraud!.This service solves the problem of an

individual’s responsibility for late realization of her/his credit card loss.

Presently, if somebody steals your credit card and you realize it late, you are

bound to pay for the delay in reporting. However, this service has not only

identified this problem, but solved it altogether. Now, a credit card customer

is insured against any expenditure on his lost credit card made12 hours prior

to reporting the loss.

Standard Chartered Bank has joined hands with Tata AIG General Insurance

Company Ltd to bring this new service to the domestic credit card industry

for the first time. Together they pledge to provide a risk cover for lost cards

that will protect customers against fraudulent transactions. It’s called the

Plus Extended Protection Plan.

This news will come as a blessing for the cardholders who are already

burdened with high interest rates. Also the news of inflation and an increase

in the interest rates doesn’t provide any incentive for the people to take up

loans from banks. Hence, at this moment, a cover which promises safety to

customers, while using their credit card, is welcome news

CHAPTER 7: CHARGEBACK INSURANCE:

This insurance is meant for the business merchants who accept credit cards.

When accepting credit cards for purchases involving large money

transactions, merchants risk their business. Fraudulent behavior on part of

the credit cardholder or the use of unauthorized or invalid credit cards puts

the merchant’s money at stake. Chargeback insurance policies protect the

merchants from these risks.

Chargeback insurance refers to an insurance coverage protecting a

merchant who accepts credit cards. The coverage protects the merchant

against cardholder fraud in a transaction where the use of the credit card was

unauthorized, and covers claims arising out of the merchant’s liability to the service

bank.

This coverage can apply under a number of circumstances, including:

A credit card is lost or stolen and used before the cardholder can

report it

Credit Card Number Generators or Counterfeit Plastic Cards

Identity theft

Post-purchase "ship to" information changes

Merchants are reimbursed for:

The cost of a stolen product or service

The loss of profit

The chargeback processing cost

CHAPTER 8:MERCHANT CHARGEBACK INSURANCE

BankCard Central provides qualified merchants’ access to chargeback

insurance protection against cardholder fraud on Card-not-Present credit

card transactions when: 

1. A Lost or Stolen Credit Card – is used before the card owner detects

it is missing;

2. Card Generators or Counterfeit Plastic Cards – with fraudulent

credit card numbers generated using software programs. 

3. Identity Fraud -- the identity of a card holder is stolen and assumed

by thieves.

4. Post-Purchase "Ship To" Changes -- After a valid transaction has

been made by the real card owner, thieves use the site's customer

service screens to gain information necessary to "assume the identity

of the order owner" and request a change in "ship to," having the

goods delivered to an alternate address of their choosing. 

The Merchant will be reimbursed for the cost of the stolen product or

services, the loss of profit, and the charge back processing cost.  The policy

covers only losses on credit card transactions processed through BankCard

Central and VERePAY when its fraud detection software and risk

management systems are used by the merchant.

PROTECT YOUR MERCHANT ACCOUNT WITH

CHARGEBACK INSURANCE.

Protection from all types of Chargebacks

Chargeback protection has virtually no restrictions. Merchants or customers

can be located anywhere in the world. Use chargeback protection for

selected sales or for all transactions.

Total Coverage

Protection from any type of chargeback including:

* Chargebacks due to fraud

* Chargebacks due to customers not recognizing merchant name on their

statement

* Chargebacks due to customers claiming the item was not delivered, was

damaged, or was not as described

* Chargebacks due to customers rejecting a shipment and demanding refund

* Chargebacks for transactions not shipped to the billing address

* Chargebacks for transactions without an AVS match

* Chargebacks for transactions delivered without signature or shipped

without tracking

* Chargebacks for transactions paid with gift cards, corporate cards, stored

value cards, etc.

* Chargebacks for transactions shipped to high risk countries

* Chargebacks for transactions with shipping and billing addresses in

different countries

* Chargebacks for software downloads, e-books, online services, etc.

Chargebacks for virtually any reason you can think of!

CHAPTER 9:CREDIT CARD FRAUD:

Credit card fraud is a wide-ranging term for theft and fraud committed

using a credit card or any similar payment mechanism as a fraudulent source

of funds in a transaction. The purpose may be to obtain goods without

paying, or to obtain unauthorized funds from an account. Credit card fraud is

also an adjunct to identity theft.

The cost of credit card fraud reaches into billions of dollars annually. In

2006, fraud in the United Kingdom alone was estimated at £428 million, or

US$750-830 million at prevailing 2006 exchange rates.

Origins

The fraud begins with either the theft of the physical card or the compromise

of data associated with the account, including the card account number or

other information that would routinely and necessarily be available to a

merchant during a legitimate transaction. The compromise can occur by

many common routes and can usually be conducted without tipping off the

card holder, the merchant or the issuer, at least until the account is ultimately

used for fraud. A simple example is that of a store clerk copying sales

receipts for later use. The rapid growth of credit card use on the Internet has

made database security lapses particularly costly; in some cases, millions [3]

of accounts have been compromised.

Stolen cards can be reported quickly by cardholders, but a compromised

account can be hoarded by a thief for weeks or months before any fraudulent

use, making it difficult to identify the source of the compromise. The

cardholder may not discover fraudulent use until receiving a billing

statement, which may be delivered infrequently.

Stolen cards

When a credit card is lost or stolen, it remains usable until the holder notifies

the issuer that the card is lost. Most issuers have free 24-hour telephone

numbers to encourage prompt reporting. Still, it is possible for a thief to

make unauthorized purchases on a card until it is canceled. Without other

security measures, a thief could potentially purchase thousands of dollars in

merchandise or services before the cardholder or the card issuer realize that

the card is in the wrong hands.

The only common security measure on all cards is a signature panel, but

signatures are relatively easy to forge. Many merchants will demand to see a

picture ID, such as a driver's license, to verify the identity of the purchaser,

and some credit cards include the holder's picture on the card itself.

However, the card holder has a right to refuse to show additional

verification, and asking for such verification may be a violation of the

merchant's agreement with the credit card companies. Self-serve payment

systems (gas stations, kiosks, etc.) are common targets for stolen cards, as

there is no way to verify the card holder's identity. A common

countermeasure is to require the user to key in some identifying information,

such as the user's ZIP or postal code. This method may deter casual theft of a

card found alone, but if the card holder's wallet is stolen, it may be trivial for

the thief to deduce the information by looking at other items in the wallet.

For instance, a U.S. driver license commonly has the holder's home address

and ZIP code printed on it.

CHAPTER 10:THE CHARGEBACK PROCESS:

The chargeback process is a largely unknown to merchants and can often be

a cause of frustration. To assist merchants in understanding the chargeback

process, let's take a look at the chargeback process used by Visa and

MasterCard. American Express and Discover Card use a similar process.

However, because they do not issue their credit cards through member

banks, there are fewer steps involved and the process is usually faster. The

process is as follows:

1.The customer disputes a transaction by contacting their card-issuing bank

2.The card-issuing bank researches to determine whether the reasoning for

the chargeback is valid. If not, the chargeback is declined and the customer

is held responsible for the charge.

3.A provisional credit is provided to the customer. The card-issuing bank

initiates a chargeback process and obtains credit from the merchant's

processing bank.

4.The merchant's processing bank researches the validity of that chargeback.

If they determine the chargeback is invalid they will decline the chargeback

and return it to the card-issuing bank.

5.The chargeback amount is removed from the merchant's account and the

merchant's processing bank provides written notification to the merchant.

6.Did a processing error occur? If so, the sale is re-presented to the card-

issuing bank for corrections.

7.The merchant provides documentation to remedy the chargeback. If the

provided documentation is found to be satisfactory, the chargeback is

declined and the customer is once again charged for the sale. If the

documentation is found to be unsatisfactory, the chargeback is successful

and the process ends.

As you can see, there are multiple steps involving multiple parties, and each

step requires the responsible party to dedicate a certain amount of time to its

management. The resolution of a typical chargeback can take anywhere from

six weeks to six months. If each party takes the maximum amount of time to

complete a responsibility, it's not hard to see how a chargeback can seem to

drag on forever.

CHAPTER 11:

CHARGEBACK INSURANCE COMPANY: OMAN

INSURANCE COMPANY

Effective immediately, Comtrust will offer protection against Merchant

Charge Backs. A chargeback occurs when a service bank debits a merchant's

account as a result of a credit card having been used fraudulently on the

merchant's website and following the consumer repudiating the transaction.

'Chargebacks are an unfortunate fact of online business when accepting

credit card payments,' explains Comtrust's Manager Marketing, Farooq

Hasan. 'In the US and Europe, for example, it is estimated that merchant loss

due to credit card fraud can amount to as much as 10 per cent of total e-

commerce revenue. The Merchant Charge Back Insurance, is therefore

designed to protect merchants from such losses.'

According to Hasan, the average chargeback rate of credit card transactions

on the Internet is about fifteen percent and can go as high as 30 percent for

some merchants that deliver digital products immediately at the time of

purchase. This compares with a rate of just one for POS (Point of Sales)

transactions*.

'Security is of paramount importance when it comes to doing business on the

Internet and is the biggest single source of concern when it comes to moving

towards e-business,' he adds.

'Confidence is not helped by reports of the increasing number of hackers and

Net criminals! However now there is added protection for merchants in the

form of this new policy'.

Omran Al Owais, Comtrust's General Manager adds that as the name

implies, Comtrust is all about building trust for everyone an enterprise deals

within the new digital economy.

'Our commitment to spurring the growth of e-business in the region is

steadfast,' he said. 'We will continually seek to attract more interest from

local and regional organisations looking forward to establish an e-business,

through various new innovations -such as this insurance policy - in addition

to our full range of e-commerce infrastructure services and solutions'.

'We are the only entity in the region that can provide an easy and convenient

method for businesses to adopt e-commerce through a one-stop-shop

concept and this new insurance arrangement, takes the trust between

ourselves and our customers to new heights'. Explained Al Owais.

Abdul Muttalib Mohd. Mustafa, General Manager, Oman Insurance

Company reiterated his company's commitment to innovation and protection

from the evolving risks of the digital economy. 'In fact, we have established

a new unit in Dubai Internet City headed by Manoj Kumar to address issues

related to risks and exposure of e-Business'.

'The new e-Insurance Policy will reimburse the merchant up to the limit of

indemnity for the loss on account of any claim arising out of merchant's

liability to the service bank for online credit card purchase where the use of

credit card was unauthorized and made fraudulently', informed Muttalib

The procedure to apply for chargeback in the oman insurance

company:

To apply for the insurance merchants simply have to complete the proposal

form at and then Oman Insurance Company will provide the terms and

pricing. 'Once the agreement is signed, Oman Insurance Company

immediately provides financial protection from credit card frauds that may

unfortunately take place on a merchant's site,' added Muttalib.

The Merchant Charge Back Insurance is one of the suite of e-Insurance

policies offered by Oman Insurance Company. The company will also

provide cover for a business which is exposed to Professional Liability due

to its e-business activities or to a Website which is hacked resulting in the

loss, not only in physical damage to valuable data, networks or software but

also in loss of business and third party legal liabilities.

Coverage:

1.This insurance will pay for the claims arising out of the Merchant.s

liability to the Service Bank for a CNP Purchase in circumstances where

the use of the consumer's Card was unauthorized and made fraudulently.

2.A CNP Purchase will be deemed to have been transacted when notice

of CNP Purchase is approved by the Payment System and recorded by

the Merchant

Eligibility:

This insurance is available to all businesses that use a processing system

acceptable to the insurers, where a CNP situation arises.

1. Processing systems

2. Cards used

3. Products / services sold

Requirements:

Past record of the merchant

Online trading history

Completed proposal form

Product details & brochure

Wait period in some cases

Fraud prevention measures

Which Cards?

All valid Credit Cards

All valid Debit Cards

bearing MasterCard, Visa Card or Switch

symbols, but excludes American Express

Card.

Excluded Countries?

If the Delivery Address is located in or the Card is Issued in the following

countries, the transactions are not covered:

Afghanistan, Albania, Algeria, Angola, Armenia, Azerbaijan, Belarus,

Bosnia & Herzegovina, Burundi, Cambodia, China, Colombia, Cuba, East

Timor, Ecuador, Eritrea, Ethiopia, Fiji, Georgia, Guinea Bissau, Guyana,

Haiti, Indonesia, Iran, Iraq, Kazakhstan, Kenya, North Korea, Kyrgyz

Stan,Lao Peoples, Latvia, Liberia, Libyan Arab Jamahiriya, Macedonia,

Malawi, Moldova, Mongolia, Mozambique, Myanmar, Nigeria, Pakistan,

Papua New Guinea, Romania, Russian Federation, Rwanda, Sierra Leone,

Slovakia, Slovenia, Somalia, Sudan, Suriname, Syrian Arab Republic,

Tajikistan, Turkmenistan, Uganda, Ukraine, Uzbekistan, Vietnam, Yemen,

Yugoslavia, Zaire or Zimbabwe.

Rating / Premium:

This is expressed as a percentage of CNP transactions (subject to a

minimum and deposit premium) and is also adjusted at the end of the policy

period.

CHAPTER 12:FACTS OF CHARGEBACK INSURANCE

ON MERCHANT ACCOUNT:

When securing merchant accounts in Panama, high incidence rates of

chargeback and sluggish collections can lead to your account’s closure.  As a

rule, chargeback rates should remain within the 1%-2% range.  Otherwise,

the account will definitely be reviewed for closure.

In some occasions, especially if the rate does not exceed 3%, the merchant

account company may not close your merchant account but they will try to

work with you to bring the chargeback rate down.  This is not guaranteed in

any way, however, and remains solely under the discretion of the merchant

accounts service provider involved.

Bringing Chargeback insurance Rates Down

This can be accomplished through order verification through telephone calls

as well as through putting up blocks on proxy servers and geographical

regions with consistently high rates of fraud.  If your company’s chargeback

incidence is high, then you are cautioned against opening a Panama

merchant account for it cannot work in your favor.  You risk merchant

account closure with high rates of chargeback.

Risks for Merchants

There are unscrupulous companies that offer offshore merchant accounts

services to companies with high chargeback rates.  Watch out for these

companies because there are cases when they just keep your funds for their

own profit – either by keeping your funds, or tying up your funds while they

generate income for their company.

For instance, such companies will make you sign a contract that tells you to

keep your chargeback rates down.  Specifically, your chargeback rate must

stay within the 1% threshold.  However, in the same contract you will see a

clause that states the merchant account company will acquire 3% on your

chargebacks.

If you exceed the 1% limit, the contract will state that your account will be

closed.  You go on with your business and start delivering the goods.  You

were advised that payments will come in two weeks with another two weeks

for holdbacks.  After the fourth week, some delays might come up which

extends the waiting time to another two weeks.  While all these are

happening, you continue delivering the goods but funds haven’t been

credited on to your account.

You then get the notification that your account will be closed and held for

six months.  Many high-risk merchants will let the merchant company get

away with it because it’s too much trouble to go to that country to file

charges and spend more money in the process.  In your case, you will

perhaps just hope for the best and wait out the six months for the funds to be

released.  However, things start getting nastier at the close of the six months

with the merchant accounts provider claiming that yours is a fraudulent

company.  The merchant account service provider then continues with its

scam and holds your funds for a few more months.

CHAPTER 13: MANAGING CHARGEBACK INSURANCE

ON PAYPAL.

Chargebacks are a perennial hot topic for PayPal sellers.  Get any group of

merchants together and ask them about their primary concerns, and you’re

sure to hear something about chargebacks.  And during the holiday season

when sales go up, so does the risk of receiving chargebacks. 

Many misunderstandings persist around the difference between PayPal’s

complaint processes and credit card chargebacks. The word “chargeback” is

sometimes used inaccurately to indicate any buyer complaint against a

PayPal seller. I’ve had several sellers tell me that they had a chargeback,

only to later learn that the buyer had in fact filed a PayPal Buyer Protection

claim. 

To be specific, a chargeback is the result of a buyer contacting his or her

credit card company asking to reverse a charge that had been placed on the

card.  The credit card company then asks the buyer what kind of chargeback

this is: did the buyer not authorize the purchase?  Did an item they ordered

not arrive?  Or did the item delivered not look at all like the item they

bought?  Most card companies immediately assume the buyer is right, so

they grant the chargeback without too much rigmarole.  Then they inform

PayPal that a chargeback has been filed.  PayPal passes along this

information to you, and the payment is reversed.

This chain of events a chargeback creates is often a frustrating experience

for our merchants – especially if it’s the first time they’ve received a

chargeback. Oftentimes, I hear that sellers think that PayPal is responsible

for filing the chargeback, because they are informed of the chargeback by

us. In truth, we’re just the messenger in this scenario. 

Buyers cannot file a chargeback on the PayPal site.  Instead, they must file

directly with their credit card company.  The chargeback process is not

designed nor maintained by PayPal, so we can’t change it or reject it.  

Everyone who accepts, issues or processes credit cards has to abide by these

rules - from sellers on eBay to huge retailers like WalMart or Target.

Now it’s important to note that within these rules, sellers can dispute any

chargeback.  One of the benefits of selling with PayPal is that our

chargeback specialists will review any chargeback claim made against you

and file a dispute on your behalf if you disagree with the chargeback reason

offered by the buyer. 

The best way to deal with chargebacks is, of course, to avoid having

transaction problems in the first place.  In other words, your good customer

service and business practices are the best way to prevent a chargeback. For

some tips on selling best practices, see my previous posts here and here. 

However, chargebacks are an inevitable reality of selling online.  If you do

get a chargeback, a couple pieces of information can be extremely helpful if

you want to dispute it.  Proof of delivery, such as online tracking offered by

both USPS and UPS, can be critical evidence in reversing the chargeback.  A

copy of the buyer’s signature confirming receipt can also be extremely

effective.  Finally, if you did refund the buyer at any point in time, proof of

the refund (and/or the shipment of a replacement item) is important.  Of

course, if you used the PayPal refund tool, we already have the evidence

needed to fight the chargeback on your behalf.

Businesses grow by understanding how to balance risk with profit. Being too

risk averse may limit your buyer pool, and in turn, your total sales volume. 

Not being risk aware opens you to problems such as chargebacks. Managing

these risks intelligently may involve exposing yourself to more chargebacks,

but the tradeoff may in fact be worth it.

In some cases, PayPal proactively protects you against chargebacks through

our free Seller Protection Policy.  The Policy covers shipments of physical

goods against claims of unauthorized payment or false non-receipt.  As long

as you ship to a confirmed address within seven days of payment and get

online proof of delivery for your shipment, we will protect you against non-

receipt and unauthorized chargebacks.  In essence, by following good selling

practices and good customer service as captured in the steps of the Seller

Protection Policy, you’re giving us the information to dispute the chargeback

and re-present the charge on your behalf. 

Chargebacks are an unfortunate part of life for sellers, both online and

offline.  However, by getting into the habit of following good seller practices

and by working with your customers to resolve their issues and concerns,

you can significantly reduce the likelihood that you’ll get a chargeback.  In

the process, you’ll also increase the odds that you’ll be vindicated should

one be filed against you.

CHAPTER 14: PAYMENT PROCESS:CHARGEBACK

INSURANCE.

Chargebacks are expensive. The merchant eats the cost of

the goods or services. Profits from the chargeback

transactions evaporate. And, the merchant must pay the

acquiring bank additional fees for every chargeback.

Chargebacks affect all merchants but are worse for

merchants selling high risk products where fraud is

common. Even with a significant investment in fraud

detection, order restrictions, and customer service

managing risk is difficult.

A strong payment processing gateway has good fraud

protection. But, if fraud settings are set too high, merchants

screen out good sales. With low settings, merchants

increase sales but are exposed to more chargeback risk.

Fears of chargebacks have kept merchants from taking

advantage of the explosive growth of international

ecommerce. But, with chargeback protection those

merchants can expand worldwide with confidence.

Chargeback insurance protection eliminates the need to

ship to the billing address, use AVS, or use a particular

shipping method. With charge back protection merchants

remove concerns about fraud and chargebacks while reduce

customer inconvenience, accept more orders, and focus on

running ecommerce businesses.

A proactive and thorough plan to prevent and deal with chargebacks is a

must-have for any business that accepts credit cards. Without an effective

plan, chargebacks can become costly and can even prompt a processor to

close a merchant account.

There are various reasons why cardholders issue chargebacks. Some of the

most common reasons are failure to receive a product in the specified time

or products being misrepresented by marketing leading to customer

dissatisfaction. Whatever the reason, the loss is magnified if a customer has

already received products or services. Chargebacks issued prior to the

receipt of goods or services results in the loss of capitol and profit for a

merchant.

If a customer disputes a charge for a product or service that they've already

received, the merchant stands to lose capitol, profit and product. If the

product or service is expensive this combination can amount to a substantial

loss. An effective chargeback plan lessens the frequency of chargebacks and

increases the likelihood of winning disputes when they are issued.

Chargeback fraud is difficult to combat with even the most comprehensive

plan. Fraud occurs when a cardholder issues a chargeback with the intention

of extorting products or services from a merchant. In a fraudulent scenario a

cardholder has no basis for issuing a chargeback. The cardholder's

motivation is to steal products or services from a merchant by taking

advantage of the system.

Unfortunately, banks unwittingly facilitate chargeback fraud by immediately

reversing disputed transactions prior to contacting the merchant involved.

Simply by initiating the process the cardholder has the battle half won.

When a cardholder issues a fraudulent chargeback, they've already received

the product or service from the merchant, the bank has given their money

back and they haven't even had to supply proof to support their claim. If the

merchant doesn't respond to the bank's notice within a specified time frame

that usually doesn't exceed 10 days, the cardholder will succeed in abusing

the system for personal gain at the expense of the merchant.

Merchants have taken issue with the inherent problems and bias in the

chargeback system for a long time but it doesn't look like banks will be

changing their policies any time soon. In the meantime, it's imperative to

include methods for preventing and winning fraudulent claims in your plan.

The best weapon against fraudulent claims is thorough sales documentation

including sales receipts, signatures and proof of delivery (if applicable).

Customers that issue fraudulent claims have no substantial proof to support

their claim. By maintaining complete sales records you greatly increase your

chances of winning these potentially costly chargebacks.

CHAPTER15: CASE STUDY:

1.CARDHOLDER DOES NOT RECOGNIZE

TRANSACTION

Used when a cardholder is unable to recognize a transaction.

Time limit - 120 days from input date

An issuer must certify an attempt to assist the cardholder in

identifying the transaction using the information in authorization and

settlement records

The chargeback can be reversed by supplying information that is

sufficient to assist the cardholder in recognizing the transaction

The dispute may be continued if no documentation is received by the

issuer, or the information/documentation received does not provide

more value than what is already present in the

authorization/settlement records

The dispute may be continued with a new reason code in response to

information/documentation supplied with the re-presentment

MERCHANT ACTION NECESSARY TO REMEDY CHARGEBACK

Provide any information to assist the cardholder in identifying this

sale or any other information that may refute this chargeback

Provide a sales draft with the transaction detail

Provide any available delivery information

CASE STUDY

The cardholder contacted their card issuer stating that they did not recognize

the transaction. A good faith effort was made to assist the cardholder in

identifying the transaction, but the cardholder still could not identify the

transaction. A chargeback was issued for "Cardholder Does Not Recognize

Transaction." The merchant supplied a rebuttal stating this was an internet

order and no receipt is available.

HAS THE MERCHANT SUPPLIED SUFFICIENT INFORMATION

TOREPRESENT?

No. The merchant must supply an invoice detailing what was purchased and

proof of delivery. The information must contain enough detail about the

transaction to assist the cardholder in identifying if that is there transaction.

2. DUPLICATE PROCESSING

Used when a merchant processed a transaction more than once, causing the

cardholder to be debited multiple times.

Time limit- 120 days from input date

An issuer must chargeback the second transaction while providing the

reference number of the first

If a second acquirer processed one of the transactions, the issuer no

longer is required to obtain a copy of the sales draft, however must

provide the other Acquirer's Reference Number

The chargeback can be reversed if the merchant can provide proof that

there were two separate transactions

Transaction amounts do not necessarily need to be the exact same

amount, however should be similar

MERCHANT ACTION NECESSARY TO REMEDY CHARGEBACK

Supply a legible copy of the sales draft for each transaction

Provide any other information that will prove multiple transactions are

valid

Please be aware that any information sent to us may be provided to

the cardholder's bank and possibly to the cardholder

CASE STUDY

Karen, planning a short get-away with new hubby Anthony, made a hotel

reservation over the phone at a posh resort during the Memorial Day

weekend. When she received her credit card statement after their stay, she

noticed that she had not only been charged on the day she made the

reservation, but also on the day they checked out. The merchant received a

Chargeback Sales Draft Request for the two transactions. The merchant

supplied the draft for the initial transaction and explained that the cardholder

was charged in advance because the reservation was for a holiday weekend.

IS THIS ENOUGH TO REPRESENT THIS CHARGEBACK?

No. The information provided would satisfy the first charge to the

cardholder's account. An explanation of the second charge on the day of

checkout was not provided. A merchant must provide a sales draft and

explanation for all transactions involved with this reason code.

3.CREDIT NOT PROCESSED

Used when a credit voucher or refund acknowledgment was not processed.

Goods were returned or cancelled and no written refund acknowledgment

was received from the merchant.

Time limit - 120 days from input date or from the date the cardholder

returned merchandise

Documentation must be provided by the issuer stating that the goods

were returned or services were cancelled

Issuer must supply a credit voucher or refund acknowledgement as

supporting documentation or the date merchandise was returned if no

written acknowledgement is available

If a credit voucher or acknowledgement is available, the issuer must

wait 30 days from the credit date for the credit to process before

initiating a chargeback

MERCHANT ACTION NECESSARY TO REMEDY CHARGEBACK

Supply proof that credit has been issued. If credit was issued by

another acquirer, supply the Acquirer's Reference Data and date of the

credit

If credit was not issued, provide an explanation as to why no credit is

due to the cardholder

Provide a written response if the goods were not returned to you

If the return was not accepted by you, provide an explanation and also

proof that the cardholder was aware of the return policy

CASE STUDY

Kenneth, the accounting manager at Merchandise For You, Inc., received a

chargeback notification for Credit Not Processed along with a letter from the

cardholder stating they had returned merchandise and were given a credit

receipt (which was included with their dispute letter). Kenneth checked

Merchandise For You, Inc.'s records and found their copy of the credit

receipt. He provided a rebuttal letter to his bank stating that their records

show that credit had been issued for this transaction. The acquiring bank

checked their records and found the credit in their records.

IS THIS SUFFICIENT INFORMATION FOR THE ACQUIRER TO

REPRESENT?

Yes. The merchant records show a credit and a credit receipt, the acquirer

also shows the credit transaction was processed.

CONCLUSION:

In the above project we have learn that how charge back insurance helps the

merchant holding credit card. It helps to cover the risk relating to credit

cards. Now no more the merchant have to fear about the frauds on cards and

various types of chargeback on it.

This news will come as a blessing for the cardholders who are already

burdened with high interest rates. Also the news of inflation and an increase

in the interest rates doesn’t provide any incentive for the people to take up

loans from banks. Hence, at this moment, a cover which promises safety to

customers, while using their credit card, is welcome news.

This insurance is meant for the business merchants who accept credit cards.

When accepting credit cards for purchases involving large money

transactions, merchants risk their business. Fraudulent behavior on part of

the credit cardholder or the use of unauthorized or invalid credit cards puts

the merchant’s money at stake. Chargeback insurance policies protect the

merchants from these risks.

BIBLOGRAPHY:

Since I have done my project through primary source I have

referred the following books and websites for preparing my project

on chargeback insurance.

Books :

1. Insurance in India

2.

Website:

1. www.altavista.com

2. www.chargebackinsurance.com

3. about.com

4. www.google.com