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Do they get away with it?
October 21, 2010 8:36 AM   Subscribe

I'm curious what happens after I dispute a visa charge?

I was just checking my online visa statement and noticed a fraudulent charge. I called my bank and they found out someone ordered boots online in my name and shipped them to an address other than my own. The bank of course is refunding me the charge, but what happens now? The merchandise was ordered in my name, so how do they pursue the recovery? Is my name tainted? How does the online retailer handle this now? Does the scammer get to keep the boots?

I'm really just curious what happens after I dispute a charge.

Also, and this is probably related, I noticed on another charge for a restaurant I did visit where they added $100 to a $141 charge i made for food and beverages. I am disputing this also, but how is that handled? I have the receipt where I put a $25 gratuity, making the total bill $166, not $266 as it shows up online. Is this going to be their word against mine?

Thanks

Btw, visa card has been cancelled and a new number issued...
posted by TLCplz to Work & Money (15 answers total) 1 user marked this as a favorite
 
I have the receipt where I put a $25 gratuity, making the total bill $166, not $266 as it shows up online. Is this going to be their word against mine?

Visa will ask the restaurant to show them the merchant copy of the receipt. If they can't find it then they'll reverse the whole charge, so they keep these things filed. Most likely what happened is that the person doing the cc charge made an error entering the number and the restaurant will confirm this. Either way the over-charge will go away.
posted by atrazine at 8:45 AM on October 21, 2010


Visa will likely send you a legally binding letter to sign, verifying the fraudulent charges. You're not on the hook for these charges.

My MasterCard was hacked a couple of months ago, and never left my possession.
The fraudsters put fake terminals in stores when clerks are distracted, get the info off your magnetic strip, then make fake cards. Or clerks will swipe your card again through a skimmer.

The $100 restaurant charge sounds different, though. Fishy. Like a waiter helped himself to a bigger tip. He might have voided the transaction and put it through again, hoping you wouldn't notice. Let Visa figure this out.
posted by weapons-grade pandemonium at 8:46 AM on October 21, 2010


I had a similar experience, my debit card was cloned and I never lost it. They caught some fraudulent charges 2000 miles away and the charges indicated that the card was present (this is how we know it was cloned). I wasn't on the hook for the charges but had to sign affidavits indicating that the charges were not mine. The merchants will be asked to produce a signed slip of the transition and any security footage (if the charge is substantial enough). I have read anecdotally that the arrest right is not that high.
posted by proj at 8:49 AM on October 21, 2010


s/right/rate
posted by proj at 8:56 AM on October 21, 2010


The $100 restaurant charge sounds different, though. Fishy. Like a waiter helped himself to a bigger tip. He might have voided the transaction and put it through again, hoping you wouldn't notice. Let Visa figure this out.


This is what I'm thinking also. I have the dinner receipt plus my customer copy where I wrote the $25 tip. The merchant copy stayed with the restaurant. Now I'm thinking, if the server simply put a 1 in front of my $25 on their copy how is that handled? (and I know i'm probably over thinking this, but $100 is a lot of money to throw away!)
posted by TLCplz at 8:57 AM on October 21, 2010


I am disputing this also, but how is that handled? I have the receipt where I put a $25 gratuity, making the total bill $166, not $266 as it shows up online. Is this going to be their word against mine?

I have pretty much never heard of someone disputing a small charge like this and anything happening other than them getting their money back. The restaurant may care about a $100 chargeback, but your credit card provider most likely does not. If anyone involved here has to spend more than $100 paying people to investigate this and figure out what happened, they are better off just giving you the benefit of the doubt and refunding it without knowing for sure that you were ripped off.
posted by burnmp3s at 9:11 AM on October 21, 2010 [1 favorite]


If it makes you feel any better i disputed a $4 charge on my card from a sketchy website ive never been to. It was more to bring it to the attention of the the card company than to get the money back.
To answer your question, yes they probably get away with it, although i believe they do track these things and if they are able to come up with enough evidence might turn it over to police. Another thing is it may help them update their anti-fraud practices/software. I have received calls from Discover card asking me if a made a charge that day to a certain store basically hours after it happened. They didnt think it was me and cancelled the transaction and stopped the transaction on the stores side (it was an online purchase).
posted by Busmick at 9:38 AM on October 21, 2010


When a chargeback is made your card provider will tell the merchant's card provider , you'll be asked to provide your evidence (send a photocopy, not the original) and your card provider will send it to the merchant's card company.

Iit doesn't matter if you're both Visa or both Mastercard, it's done at arm's length like this because you are claiming as a retail customer, under your Retail Services credit or debit card agreement, whereas the merchant has a Merchant Services agreement, which is handled by a different area of the card business.

The onus is on the merchant to prove the charge is correct. My view (and I have some experience of this) is that it will be difficult for the restaurant to show that the charge is correct when you have a copy of the same transaction slip showing a different figure.

Often, if Retail Services acting on your behalf is satisfied the chargeback is justified, it will usually put the money back in your account immediately. If Merchant Services is satisfied that the chargeback claim is justified, it will remove the money from the merchant's account and repay it back to Retail Services.

Sometimes your card company will refund the money but Merchant Services will continue to dispute it. That will be resolved between the card providers using the arbitration provisions under the Visa/Mastercard rules.. If that happens, there is a possibility, albeit fairly unlikely, that many months in the future the money will be deducted from your account if there has been an arbitration which has found in favour of the Merchant Services provider - you will not be told about this, it's a dispute resolution service between the card providers. From what you say, though, I think this possibility is remote.
posted by essexjan at 9:47 AM on October 21, 2010


I do e-commerce merchant banking kinda stuff, so...

The merchant gets a chargeback notification. The entire burden is on the merchant to prove that the charge is legit. Regardless of what is wrong (forged card, stolen card, etc. etc.), unless the merchant can document that you personally purchased the items (and in the case of what sounds like an inflated tip, approved the tip), you will win and they will lose.

Except in the rare cases where a chargeback notification is successfully contested, the next step is the merchant gets the money (plus a service charge) taken out, and presumably the merchant bank refunds your own bank. (The cardholder has usually gotten reimbursed already)

In theory, you might be responsible for the first $50 under some circumstances, but banks generally refund ALL your money.

There are no repercussions or tick marks against the cardholder for doing this. I suppose if the same cardholder kept losing their card or if a pattern of filing false affadavits emerged, your bank might take a look at it, but it's not like, say, car insurance, where every incident somehow counts against you.

As a MERCHANT, I can only get so many chargebacks before the merchant bank starts giving me the stink-eye, but it's a relatively high treshold. Most e-commerce merchants get a charge-back every now and then.

The one thing I would ask is that you contact the merchant directly and give them a chance to do a refund before doing a chargeback. It a) sometimes reveals that you did buy something, you just didn't remember the merchant name or it wasn't what you expected to see on your statement and b) saves the merchant a service charge. If you're just dissatisfied with the product (or in the case of the tip, suspect an employee either made a mistake or was dishonest), the merchant should get the chance to make it good.

But ALWAYS get your card re-issued if something sketchy has occurred. If your card number has been misused, it may be in the hands of someone who is selling the number. There is a substantial market in buying and selling stolen card numbers.
posted by randomkeystrike at 9:55 AM on October 21, 2010 [1 favorite]


The merchant gets a chargeback notification. The entire burden is on the merchant to prove that the charge is legit. Regardless of what is wrong (forged card, stolen card, etc. etc.), unless the merchant can document that you personally purchased the items (and in the case of what sounds like an inflated tip, approved the tip), you will win and they will lose...

What Randomkeystrike is alluding to here is the Electronic Funds Transfers Act aka Regulation E. This applied to any electronic transaction over $50 and basically says that its your word against theirs except that its assumed you're right unless the merchant has some evidence to the contrary. Generally speaking, it simply isn't worth the merchant's time to even investigate the transaction and even the merchant simply assumes that you're right and eats the charge.

I've also heard that the real meat of Visa's zero liability policy is they reimburse the merchants for these losses but I can't cite that. Maybe Randomkeystrike knows?

As for the person(s) who stole your card information. Likely, nothing at all will happen to them unless they get tied to a larger fraud ring and they used their real information to get stuff shipped. The crimes are simply too small and too common to prosecute all of them. Law enforcement simply has too many fish to fry so they start with the biggest ones and go down. One of the fraud people at the bank I used to work for once told that she spent most of her time trying to tie fraud cases together and shopping them around to any relevant jurisdiction until they found someone willing to prosecute the offender.
posted by VTX at 10:50 AM on October 21, 2010


Wow, interesting stuff. Thanks everyone. I feel much better.

For the record, i was on a three-way call with my bank and the online establishment regarding the fraudulent transaction. I verified i had not made the purchase and they verified the boots weren't coming to my address.
posted by TLCplz at 11:30 AM on October 21, 2010


As far as the restaraunt thing, I used to work in a restaraunt and can tell you what (99% sure) happened.

You gave a credit card to pay for your original bill. The server takes the card and swipes it to get teh receipt you sign.

Since you can add tip to the card and this is done after swiping, the charge is "stored" on the restaraunt's system until the server gets the signed slip back with the tip section filled out. If you leave a cash tip, they just reopen your bill and close it out at the original charge, but if you leave a tip on the card the server reopens the charge and adds the tip. Your server likely went to add "25" and pushed "125" by mistake (pushing the 1 and 2 buttons at teh same time as they are next to each other) and closed it out. The worst that will happen on the restaraunt end is they will ask the server to payback the mistaken 100$ overtip.
posted by WeekendJen at 11:34 AM on October 21, 2010


I've also heard that the real meat of Visa's zero liability policy is they reimburse the merchants for these losses but I can't cite that. Maybe Randomkeystrike knows?

VTX Not really. The only program that I know about that provides "liability shift," in merchant bank jargon, is Verified by Visa (and I think MC has something similar).

In short, VBV is a voluntary program where you, the cardholder, can enroll, and IF you are enrolled and IF the e-comm site participates, you'll be shunted during the checkout loop to a separate page which is controlled by Visa (much like you would be shunted to a PayPal site while buying from a merchant using PayPal).

While on this separate page, you will give Visa the secret handshake, and then return to the merchant page to complete the deal.

If a transaction happens after all this, the merchant is presumed to have acquired the card honestly, regardless of what the customer says later, and the bank cannot take the money back from the merchant (i.e. liability shift)

If a cardholder who is NOT enrolled goes to the same site, they won't go through these hoops, and if a cardholder who IS enrolled goes to a site that doesn't do this, again, they won't have all this happen.

If this sounds like a lot of extra work on the part of both cardholder and merchant, it is, and that's why it's had a poor success rate. What's really funny about it is that the cardholders get sold on it thinking it somehow protects them, and in fact it really protects the merchant, if anyone... but the merchants aren't doing it because it's extra coding work, is perceived as making conversion rates worse, and (chicken and egg problem) so few cardholders sign up. And the entity which actually "sells' the cards (your local banks) don't exactly tout it because - they'd rather honor the chargeback and take the money back from the merchant than have an angry customer.
posted by randomkeystrike at 1:04 PM on October 21, 2010 [1 favorite]


more direct answer on re-read - Visa's "zero liability policy" is simply their statement and guarantee of what commonly goes on with all major cards, at least for US cardholders, based on common practice and the laws which have been cited. It's a guarantee to the cardholder, not the merchant.

BTW, lest I leave the wrong impression, believe it or not I agree that the protection should weigh for the customer and not the merchant. The merchant has the right not to sell the goods if he feels the order may not be legit, and has a duty to check the identity of the presumed cardholder. A little due diligence covers you 99.5% of the time.
posted by randomkeystrike at 1:07 PM on October 21, 2010


From your end, what will happen is very simple: You dispute. They credit your account (at least with most banks). You receive affidavit in mail. You sign and return affidavit. You never hear anything about it again.

In the case of the restaurant (I've never had a mis-charge, only one fraudulent charge), they may ask for a copy of the receipt, but for the boots, they don't care beyond getting back the affidavit.
posted by wierdo at 6:24 PM on October 21, 2010


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