Download - Charge Back Insurance
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