Managing Visa Disputes during COVID-19

Visa implemented a COVID-19 Dispute Monitoring Program that will help maintain the dispute process by reducing the number of invalid disputes initiated into the system. It will monitor daily dispute volumes with a focus on consumer-related disputes. The system will monitor the following:

  • Dispute volumes for airlines, entertainment, lodging, transportation, and travel services.
  • A dispute for goods or services not received is considered invalid if:
    1. It lacks detailed explanation of the dispute reason, and
    2. The merchant is able to provide the service, and
    3. The cardholder has not made an attempt to resolve with the merchant directly.

Visa has also provided FAQs for these dispute types and reasons.

If you have any questions about disputed transactions, please contact Adam Lamprecht at 605-335-5104 or [email protected]

 

Disputes Involving Cancellations by a Merchant

 

Question 1: The cardholder purchased goods/services and the merchant decides to cancel the good(s) or service. For example, an airline cancels a flight due to low demand. Does an issuer have dispute rights?

Answer: Yes, there is a dispute right when goods/services are not provided for any reason, including bankruptcy or other circumstances. The EXCEPTION is cancellations due to government prohibition as government regulation and/or law supersedes Visa rules on dispute rights. Our expectation is that issuers require a cardholder to attempt to resolve disputes with merchants before initiating a dispute.

 Question 2: The cardholder purchased goods/services and the merchant cancels the good or service due to a government prohibition. For example, an airline cancels a flight because the government closed the border or a gym closes operations because of a government mandate to cease operations. Does an issuer have disputes rights?

 Answer: No, if the merchant has not provided the service due to a government-imposed prohibition, the cardholder does not have a dispute right. Government regulation and/or law supersede Visa rules on dispute rights. The cardholder should work directly with the merchant to resolve.

 Question 3: A cardholder has tickets for an event such as a sports match, a concert or a theater performance that was cancelled and rescheduled; however, the cardholder does not want to attend the event on the alternate date chosen by the merchant. Does an issuer have dispute rights?

 Answer: Yes. The merchant is responsible for providing the purchased service on the agreed upon date and the cardholder is not required to accept an alternate date. However, if the reason for the cancellation of the event was due to a government-imposed prohibition on proceeding with the event as originally scheduled, then the cardholder would not have a right to dispute the transaction. Government regulation and/or law supersedes Visa rules on dispute rights. The cardholder should work directly with the merchant to resolve.

 

Disputes Involving Cancellations by a Cardholder

 Question 4: The cardholder purchased services, however chose not to use them due to the cardholder’s concerns related to COVID-19. For example, the cardholder chooses not to travel on their scheduled flight and cancels their ticket. Does an issuer have dispute rights?

 Answer: No, the issuer does not have dispute rights if a cardholder chose not to use services made available by a merchant, as the merchant has fulfilled its obligations to provide the service and has properly disclosed its terms and conditions. This also applies to non-airline merchants, such as hotels and other venues that kept their obligations to deliver services. The cardholder should work directly with the merchant to resolve.

 Question 5: A cardholder is unable to take a scheduled flight due to travel restrictions on the cardholder. For example, a cardholder may not be permitted to board a scheduled flight due to their nationality (as a result of government travel restrictions) or medical symptoms, or the cardholder cannot reach a hotel stay due to border closures. Does an issuer have dispute rights? 

Answer: No. The issuer does not have disputes rights if a cardholder cannot use or access services made available by a merchant as long as the merchant and has properly disclosed its terms and conditions. This also applies to non-airline merchants, such as hotels and other venues that kept their obligations to deliver services. The cardholder should work directly with the merchant to resolve.

 Question 6: A cardholder missed their flight (for any reason) and as a result, missed a subsequent separate non-refundable service, such as a cruise or prepaid hotel reservation. Does an issuer have a dispute right for the subsequent missed service?

 Answer: No. The issuer would not have dispute rights for the subsequent missed service. The cardholder should work directly with the merchant to resolve.

 

Use of Credit / Vouchers in Lieu of a Refund

 Question 7: A cardholder purchased a good or service and decided to not to use it, however the merchant was willing and able to provide the purchased goods / service. As a courtesy, the merchant offered a credit / voucher for future use. The merchant went bankrupt before the cardholder uses the credit / voucher. For example, a cardholder calls the airline and does not want to travel because of COVID concerns so the airline issues a credit voucher for future use. Does the cardholder have a dispute right?

 Answer: No. The merchant was able to provide the service and the cardholder cancelled outside of the merchant’s properly disclosed policy. Since the issuer did not have the dispute right for a refund on the original transaction, the extension of the voucher by the merchant to the cardholder does not later change the dispute rights.

 Question 8: A merchant notifies the cardholder they are cancelling the service and offers a voucher for future use. Even though the cardholder has a right to dispute the transaction and receive a refund, the cardholder agrees to accept the voucher. If the merchant then files for bankruptcy before the cardholder uses the voucher, does the issuer have a right to file a dispute?

Answer: Yes. Since the issuer had the dispute right to get a full refund, the acceptance of the voucher does not change those dispute rights. The cardholder would have to file the dispute in the appropriate time frame which is either 120 calendar days from the transaction date or 120 calendar days from the last date that the Cardholder expected to receive the merchandise or services, not to exceed 540 days from the transaction date.

 

Disputes Involving the Purchase of Gift Cards

 Question 9: The cardholder purchased a proprietary gift card from a merchant. The merchant goes out of business and the cardholder calls the issuer to initiate a dispute as they cannot receive goods/services or a refund from the merchant. Does the issuer have dispute rights?

 Answer: Yes. The gift card represents purchased services and the merchant is unable to provide the service.

The timeframe to dispute the transaction is either 120 calendar days from the transaction date or 120 calendar days from the last date that the cardholder expected to receive the goods/services, not to exceed 540 days from the transaction date.

 Question 10: The cardholder purchased a merchant-specific proprietary gift card from a third-party (e.g., a grocery store) using their Visa card. The merchant named on the gift card ceasesd operations. For example, cardholder buys a restaurant gift card from a gift card display at the local grocery store. The restaurant goes out of business before the cardholder redeems their gift card. Does the issuer have a dispute right?

 Answer: Yes. There is a dispute right when goods/services are not provided for any reason, including bankruptcy or other circumstances. Cardholders must first attempt to resolve the dispute with the merchant of record (in this example the local grocery store). The dispute would be against the acquirer of the local grocery store who is the merchant of record on the gift card sale and is ultimately responsible for that transaction. The timeframe to dispute the transaction is either 120 calendar days from the transaction date or 120 calendar days from the last date that the cardholder expected to receive the merchandise or services, not to exceed 540 days from the transaction date.

 

Additional General Questions:

 Question 11: Due to a merchant cancellation of a service, the cardholder incurs additional out-of-pocket expenses. For example, a cardholder’s flight is cancelled, and they are rebooked for a flight the following day. The cardholder takes a taxi to a nearby hotel to stay the night and wants to be reimbursed for the additional cost of the taxi and hotel. Can these be included in the dispute?

 Answer: No, the dispute value is limited to the value of the services not received.

 Question 12: If a cardholder orders merchandise from a merchant and the merchandise is not received by the expected date, can a dispute be pursued?

 Answer: Yes. If the merchant fails to provide the merchandise by the expected date, the cardholder would have a valid dispute. Issuers are reminded that cardholder must first attempt to resolve the dispute with the merchant.

 Question 13: A cardholder attempts to return merchandise within the merchants disclosed policy; however, the merchant’s location has been closed for business due to the COVID-19 restrictions, or is no longer in business. Would there be dispute rights?

 Answer: Yes, the issuer can process a dispute. However, if the acquirer can demonstrate that the merchant was open and able to accept return of the merchandise, the liability will sit with the issuer. The issuer is encouraged to remind the cardholder to contact the merchant directly as some merchants have extended their return windows during this time.

Phishing Attempts Increasing due to COVID-19

Phishing is the attempt of stealing a person’s data by a fraudster, mainly login credentials and card information. Fraudsters will then use this information to perpetrate fraudulent transactions. They will often use social media or information bought on the Dark Web to initiate scams.

Fraudsters will use information from social media to make the scam sound more believable. They will also spoof the financial institution’s phone number when contacting the cardholder to make it seem legitimate.

The following is an example of the recent Phishing Attack:

The fraudster gathers information from social media to make the scam more believable. Then, the cardholder receives a phone call from the fraudster posing as a financial institution employee. Fraudsters often spoof phone numbers from the financial institution when contacting the victim, making it seem legitimate.

The fraudster advises the cardholder that they have fraud attempts on their card and they will receive a text with a case number. While on the phone, the fraudster will perform a transaction they know will generate a fraud alert. When the cardholder receives the case number, the fraudster asks for the case number over the phone so the card can be permanently blocked. Instead the fraudster is using the case number to call into the SecurLOCK IVR and validate the activity as valid, so they can continue to use the card fraudulently.

The fraudster may also suggest the cardholder transfer money into their checking account from savings to make it “safer,” thereby giving the fraudster access to more money. The cardholder thinks the fraud was caught and stopped, while the fraudster is busy committing more fraudulent transactions and stealing more money.

As a reminder, SecurLOCK will never ask for the following information:

  • Account Number/Card Number
  • CVV
  • PIN
  • Passwords
  • Social Security Number
  • Online Banking Credentials

Also, SecurLOCK will never suggest transferring money from one account to another. If any information concerning suspicious activity is texted to the cardholder, SecurLOCK does not call and ask the cardholder for the information. When cardholders call into SecurLOCK to validate suspicious transactions, SecurLOCK will request the case number to authenticate them. The cardholder should always reply NO if they are unaware of the transactions in question received via a text or email, no matter what direction has been given to them.

If you have any questions, please contact

The Advantage Network at 605-335-5113.