What should I do if I am in doubt about a bank card transaction?

Summary
Understanding a fraudulent situation
What is fraud and how is it identified?
What is 3D Secure ?
How can we manage and limit the risk of fraud?
What should I do if I have any doubts?
What is a card retreival request?
Card chargebacks
What is a chargeback?
What are the main reasons for chargebacks?
How do I identify chargebacks in my dashboard?
How do I dispute a chargeback?

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Understanding a fraudulent situation

What is fraud and how is it identified?

Fraud occurs when credit card information is used unlawfully (physical theft of the card, online theft of card data, etc.). 
Although card fraud affects all online activities, some types of activity, such as eCommerce or Crowdfunding donations, are more vulnerable than others.
Fraud is identified when the cardholder informs his bank that he is not the originator of a transaction on his account statement, and therefore asks the bank to stop the transaction (usually within 120 days).
The cardholder's bank then begins a procedure to recover the unlawfully debited funds and reimburse the cardholder.
Card payments are inherently susceptible to fraud and it is important to take this into account (e.g. applying a rolling reserve, applying a delay for your customers' outgoing funds) when drawing up your business plan / establishing day-to-day operations.
Although it is the partner (you) who bears the responsibility for combating card fraud, Lemonway strives to minimise this risk and to protect you from fraudulent behaviour as much as possible.

What is 3D Secure?

3D Secure is a secure online payment protocol used under the trading names “Verified By Visa” and “MasterCard SecureCode” designed to limit online fraud related to the fraudulent use of payment card numbers. It is designed to ensure that the card used for every online payment is used by its real owner.
If both the acquirer's bank (Lemonway's bank in your case) and the cardholder's bank are equipped, an additional step takes place at the time of payment.
In addition to the credit card number, card expiry date and security code/CVV digits, the payer may be required to enter a password, date of birth or a dynamic One-Time Password (OTP) sent to his mobile phone depending on the cardholder's bank's policy.
Although the implementation of 3D Secure has a proven negative impact on purchasing funnels (adding an extra step), any loss is usually more than offset by the drastic reduction in card fraud/chargebacks (normally borne by the merchant/you).
A 3D Secure transaction effectively transfers liability (a "Liability Shift") from the acquirer's bank (the bank used by Lemonway to process the transaction) to the cardholder's bank, and gives the transaction a non-disputable quality (the cardholder cannot dispute having made the payment), thus de facto reducing the possibility of chargebacks (non-delivered/non-compliant product, etc).

How can we manage and limit the risk of fraud?

Lemonwway provides you with a certain amount of information about transactions (all means of payment) carried out on your platform. We recommend that you set up alerts (checks that can be performed manually from your dashboard or automated via the API) specific to your activity in order to detect potentially fraudulent behaviour.

You will find below some examples to edit/adapt/complete:

  • A sudden increase in the number or volume of incoming transactions
  • A sudden drop in the card acceptance rate
  • A significant/abnormal increase in your card chargeback rate
  • A card chargeback rate in excess of 0.2% per payment account
  • A refund rate in excess of 0.5% per payment account
  • Significantly higher payments than the usual average basket
  • Requests for cash disbursements less than 48H after receipt of a payment
  • Multiple disbursement requests in a very short period of time
  • An increase in the number of transactions at unusual days/times
  • Use of the same bank card for different purchases with different identities/on several different payment accounts

What should I do if I have any doubts?

If you think you have identified fraudulent behaviour on your platform, please contact us as soon as possible, providing us with as much information as you can (transaction ID, screenshots, etc.), so that our fraud experts can investigate and provide you with our findings/recommendations/actions.
As a general rule, we recommend that you do not inform the customer/cardholder concerned of your suspicions, in order not to jeopardise the investigation (this does not prevent you, for example, from blocking disbursement requests for this customer on the pretext of a technical error if questioned).

What is a card retreival request?

A request for a card receipt/information is made when the cardholder contacts his bank to obtain information about a transaction that he does not recognise/associate with a purchase.
These requests are sent from the cardholder's bank to the acquiring bank, then from the acquiring bank to Lemonway, and are forwarded to you by email.
They include:

  • Transaction date
  • Transaction amount
  • First & last 4 digits of the card used for payment
  • Action expected from you (e.g. provision of a particular document)

If you wish to respond to this request (there is no obligation), you then have 5 working days to provide us by return email with the requested documents/supporting evidence/any document that proves the legitimacy of the transaction/product delivery/service provision etc.
This information is then forwarded to the acquirer's bank, which forwards it to the cardholder's bank, which forwards it to the cardholder, who can then decide to close the request (no further action) or to dispute the transaction, which will, if time limits allow, result in a card chargeback.

Card chargebacks

What is a chargeback?

An card chargeback means that a card payment is cancelled when the cardholder contests the payment with his bank.
There are a number of possible reasons for chargebacks (specified in the notes field of the chargeback transaction), the most common of which are: fraudulent transaction, unrecognised transaction, goods not received/service not rendered, duplicate payment.
A card transaction may be subject to a chargeback for up to 13 months from the date of the original transaction.

A card chargeback results in:

  • For the cardholder: a refund of the total or partial amount of the original transaction
  • For you/the merchant: a debit of the chargeback amount from the payment account that received the original transaction and Lemonway debiting the associated chargeback fee from your merchant payment account (SC).

Your customers' chargebacks and associated costs are therefore all and without exception at your expense, as stated in your contract.

What are the main reasons for chargebacks?

The main reasons for card chargebacks ( automatically included in the notes on the chargeback transaction in your dashboard) are listed below:

MAIN REASONS FOR CARD CHARGEBACKS

Unidentified/unknown transaction

Disputed transaction/cardholder did not carry out the transaction

Fraud - cardholder not present/stolen card

Services not provided or goods not received

Complaint of defective goods

Cancellation of recurring payment

Authorisation denied

The "quality" of chargeback reasons varies and depends on the cardholder's bank. Lemonway has no additional information and is unable to contact the cardholder's bank if a reason appears to be incorrect or unclear.

How do I identify chargebacks in my dashboard?

A card chargeback results in two (or even three - see below) transactions on your dashboard:

  • The chargeback transaction (Method = Card/Type = Outgoing/Status = Successful) in the customer payment account to which the original transaction was credited, showing the reason for the chargeback in the Notes field (as reported to Lemonway by the cardholder's bank) and the ID of the original transaction in the Original Transaction In the event that the balance of the relevant customer payment account is insufficient for the chargeback transaction to be debited, Lemonway automatically performs a P2P transfer from your merchant payment account (SC) to the relevant customer payment account for the shortfall before proceeding with the chargeback transaction.
  • The transaction corresponding to the chargeback fee charged by Lemonway (P2P from your merchant payment account to the Lemonway payment account for the amount specified in your contract)

Card chargeback transactions can be retrieved via the API or retrieved/exported manually from your dashboard.

Dashboard Version 1

To identify Chargebacks in your dashboard you need to follow these steps: Operations Overview. You can select filters and select:

  • Method: Card
  • Type: Outgoing
  • Stats: Success
  • Comments: chargeback

Select the date or time range, and then click Filter.

Dashboard Version 2

To identify Chargebacks in your dashboard you need to follow these steps: Operations > All. You can select filters and select:

  • Method: Card
  • Type: Outgoing
  • Status: Completed
  • Comment: chargeback

How do I dispute a chargeback?

If you believe that a chargeback is fraudulent, you have the right to contest it up to 12 working days following the date of the chargeback.
To contest a card chargeback, please contact us and provide us with as much information as possible to substantiate the transaction/delivery of the product/service, etc. :

  • ID of the relevant transaction
  • Invoice, interaction history, order confirmation/notification, delivery note, proof of receipt of the package
  • Explanatory letter summarising the facts (purchase worth XX EUR made on a particular date) and detailing the reasons for the dispute.

The information received is then forwarded to the acquiring bank by Lemonway; a formal dispute procedure then follows between the acquiring bank and the cardholder's bank resulting in agreement (cancellation or upholding of the chargeback) or disagreement (submission to the Interbank Arbitration Committee for a final decision). The time limit for resolving inter-bank disputes is not standard and can vary greatly (from a few weeks to several months) depending on the bank/case.
If a chargeback is cancelled (this is called representation of the chargeback amount) at the end of the process, the cardholder is again debited the amount of the charged-back transaction, and you are automatically credited (new card Money-In with a Successful status in the payment account of the original transaction and with the ID of the original transaction in the Original Transaction field). 

NB: You will not receive any notification if the chargeback is not cancelled after the dispute procedure.

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