EMV Liability Shift Delayed
New Visa Fraud Monitoring Program for Automated Fuel Dispensers
Visa has been working with merchants, acquirers, and fuel-industry providers to support migration to the more secure EMV technology. However, due to challenges with EMV Automated Fuel Dispensers (AFD) solution readiness, Visa is delaying the U.S. domestic AFD EMV liability shift date to 1 October 2020. To help mitigate any increases in counterfeit fraud at AFDs in the interim, Visa will expand its existing Visa Fraud Monitoring Program (VFMP) to include a new U.S. AFD-specific fraud-monitoring program. The expanded program will have unique thresholds based on U.S. AFD counterfeit fraud trends. For AFD locations that exceed the defined thresholds and reach enforcement status, issuers will receive chargeback recovery rights for reported counterfeit fraud. The new AFD fraud-monitoring program will begin in July 2017, identifying fraud in June 2017, the previous month.
EMV Liability Shift:
- The EMV liability shift is designed to better protect all parties.
- With the new rules, the party that is the cause of a chip transaction not occurring, either the issuer or acquirer, will be held financially responsible for any resulting card-present counterfeit fraud losses.
- Issuers assume counterfeit fraud related liability if a non-chip card is presented at a chip-capable
- Acquirers assume counterfeit fraud-related liability if a counterfeit chip card is presented at a non-chip-capable terminal.
U.S. Automated Fuel Dispenser EMV Liability Shift Delayed VFMP-AFD Program
The VFMP-AFD program applies only to U.S. domestic transactions at AFDs (Merchant Category Code 5542). The VFMP will continue to operate as currently defined in the Visa Rules (ID#: 0029288). Visa will notify U.S. acquirers of all the AFD merchant outlets in their portfolios, which are identified in the VFMP-AFD through the Visa Risk Performance Tracking (VRPT) tool available on Visa Online. Just as with the existing VFMP, the VFMP-AFD will review the previous calendar month’s domestic counterfeit fraud dollar totals and the domestic counterfeit fraud-to-sales ratio. However, the thresholds for VFMP-AFD are specific for and apply only to U.S. domestic AFD transactions.
U.S. AFD merchant outlets will be identified on a monthly basis if they meet or exceed the program’s “standard” thresholds for counterfeit fraud activity in the previous calendar month,
- $10,000 in U.S. domestic counterfeit fraud AND
- $0.20 percent U.S. domestic counterfeit fraud amount to domestic sales amount ratio
Excessive Fraud Program
U.S. AFD merchant outlets will be identified on a monthly basis if they meet or exceed the program’s “excessive” thresholds for counterfeit fraud activity in the previous calendar month, as follows:
- $10,000 in domestic counterfeit fraud AND
- $2.00 percent domestic counterfeit fraud amount to domestic sales amount ratio
- U.S. domestic transactions only
U.S. Automated Fuel Dispenser EMV Liability Shift Delayed
- VFMP-AFD Program Timelines
- VFMP-AFD Standard Program Timeline
- The VFMP-AFD program timelines mirror the existing VFMP program timelines. The following table summarizes the VFMP-AFD Standard Program timeline, with more detail available in the Visa Rules. The Standard Program will begin in July 2017 (identifying fraud in June 2017, the previous month).
ACQUIRER ACTIONS / PROVISIONS BY PROGRAM MONTH
Program Month 1: Notification (e.g., July 2017)
- Visa identifies merchant locations that exceed the program thresholds for fraud in the previous month (e.g., June 2017).
- Visa notifies the acquirer that it has a merchant location in the program. The acquirer must notifiy the merchant, review the merchant’s activity, and take appropriate mitigating steps.
Program Months 2-4: Workout Period (e.g., August through October 2017)
- Acquirers work with merchant locations to take action to reduce fraud levels below at least one of the listed thresholds.
Enforcement Period: Months 5+ (e.g., November 2017 onward)
- If the merchant location reduces fraud levels for the previous month (e.g. October 2017) below at least one of the listed thresholds, they will not be subject to Reason Code 93 chargebacks for counterfeit fraud.
- If the merchant location is not able to reduce fraud levels below at least one of the listed thresholds, they will be subject to Reason Code 93 chargebacks for counterfeit fraud.
Note: Member Appeal Rights do not apply to the release of Reason Code 93 chargebacks.
VFMP-AFD Excessive Fraud Program Timeline
ACQUIRER ACTIONS / PROVISIONS BY PROGRAM MONTH
Program Month 1: Counterfeit Liability (e.g., July 2017)
The VFMP-AFD Excessive Fraud Program timeline differs from the Standard Program Timeline in that merchant locations will be subject to Reason Code 93 chargebacks for counterfeit fraud immediately, in Month 1. The acquirer will not be subject to non-compliance assessments. The Excessive Fraud Program will begin in November 2017 (identifying fraud in October 2017).
Program Workout Period (through remediation)
Once a U.S. AFD merchant outlet exceeds the Excessive Fraud Program threshold, that merchant will remain on the Excessive Fraud Program timeline until it remediates out of the program altogether. In addition:
- Visa may escalate a U.S.-acquired AFD merchant outlet from the Standard to the Excessive Fraud Program timeline if it determines that the merchant poses a threat the Visa payments system.
- Any U.S. AFD merchant outlet that re-enters the program within 12 months of completing remediation will automatically escalate to the Excessive Fraud Program timeline.
VFMP-AFD Program Duration
The VFMP-AFD program is scheduled to end in October 2020 for fraud identified in September 2020. After the VFMP-AFD terminates, AFDs will revert to monitoring under the terms of the existing VFMP as defined in the Visa Rules (ID#: 0029288). The existing VFMP remains unchanged and will continue to monitor fraud during the extension period.Cited www.usa.visa.com