Visa Chargeback Reason Code 10.5: Visa Fraud Monitoring Program (VFMP)

Overview:

Reason Code 10.5 is used when a chargeback is initiated under the Visa Fraud Monitoring Program (VFMP). This program aims to monitor and manage fraudulent activity to protect both cardholders and merchants.

Causes:

This chargeback occurs when transactions are flagged as potentially fraudulent. Key reasons include:

• The merchant’s fraud ratio exceeds the thresholds set by Visa.
• Transactions are identified as part of a pattern of fraudulent activity.
• Cardholders report unauthorized transactions.

Time Frame for Resolution:

• Chargeback Initiation: Issuers typically have 120 calendar days from the transaction processing date to initiate a chargeback under this reason code.
• Merchant Response: Merchants usually have up to 30 days to respond to the chargeback once it is received.

Prevention and Mitigation:

1. Implement Strong Fraud Prevention Measures:
   • Use advanced fraud detection tools and technologies such as machine learning and artificial intelligence.
   • Employ multi-factor authentication (MFA) for transactions.
   • Validate CVV and AVS (Address Verification System) for card-not-present transactions.
2. Monitor and Analyze Transactions:
   • Regularly review transaction patterns for unusual or suspicious activity.
   • Set transaction limits and velocity checks to detect rapid multiple transactions.
3. Maintain Compliance with Visa Regulations:
   • Stay informed about Visa’s fraud prevention guidelines and ensure compliance with the Payment Card Industry Data Security Standard (PCI DSS).
4. Communicate Clearly with Customers:
   • Ensure that customers recognize transactions by providing clear and consistent billing descriptors.
   • Offer robust customer service to address disputes promptly before they escalate to chargebacks.
5. Implement Chargeback Alerts:
   • Use chargeback alert services to get real-time notifications of disputes, allowing for quicker resolution and potential prevention of chargebacks.
6. Analyze and Learn from Chargebacks:
   • Conduct a thorough analysis of past chargebacks to identify trends and areas for improvement.
   • Implement corrective actions based on findings to prevent future chargebacks.