Updates on the Visa Fraud Monitoring Program (VFMP)

Visa 03/11/2020

What’s changing?

Visa is updating the Visa Fraud Monitoring Program (VFMP) Standard Timeline and the Liability Shift Rules for Dispute Condition 10.5 - Visa Fraud Monitoring Program.

Background

The Visa Fraud Monitoring Program (VFMP) tracks fraud activity and identifies merchants whose volume of transactions reported as fraudulent surpass certain thresholds as shown below:

Standard Threshold (both conditions must be true)

  • USD 75,000 (or equivalent) in reported fraud
  • 0.90% fraud-to-sales ratio (fraud amount / sales amount)

Excessive Threshold (both conditions must be true or the merchant is classified in a high-brand risk MCC*)

  • USD 250,000 in reported fraud
  • 1.80% fraud-to-sales ratio (fraud amount / sales amount)

Condition 10.5 allows issuers to raise disputes for fraudulent transactions associated with merchants identified in the VFMP as meeting or exceeding the established thresholds.

What does the change mean?

Currently, merchants who meet the conditions for the Standard threshold and enter the Visa Fraud Monitoring Program will have chargeback liability from the 5th month onwards and for the duration of the program.

With the changes here announced and applicable immediately, the chargeback liability shift applies from the 1st month, and is extended until three months after exiting the program or ceasing the processing.

Additionally, non-compliance fees will apply between months 5-12 from April 2021 onwards.

The Excessive Threshold timeline remains unchanged; merchants identified in this category will face chargeback liability and non-compliance fees from the 1st month.

How will this affect you?

If you are entered in the VFMP, you will incur non-compliance assessment fees following this schedule:

Standard timeline

Month Assessment (per case and per month)
AP, Canada, CEMEA, LAC, U.S. Regions Europe Region
Month 1-4 Not applicable Not applicable
Month 4-6 USD 25.000 EUR 21.750
Month 7-9 USD 50.000 EUR 43.500
Month 10-12
(and subsequent months)
USD 75.000 EUR 65.250

Excessive timeline

Month Assessment (per case and per month)
AP, Canada, CEMEA, LAC, U.S. Regions Europe Region
Month 1-3 USD 10.000 EUR 8.750
Month 4-6 USD 25.000 EUR 21.750
Month 7-9 USD 50.000 EUR 43.500
Month 10-12
(and subsequent months)
USD 75.000 EUR 65.250

Additionally, once you have entered the program, you will be liable for transactions disputed under condition 10.5 – Visa Fraud Monitoring Program from the 1st month and up to 90 days after exiting the program or ceasing the processing.

Merchants can exit the program after operating below the standard thresholds for three consecutive months.

*High-Brand Risk Merchant Category Codes

Transaction Type MCC Description
Card-Absent Transactions MCC 5962—Direct Marketing—Travel-Related Arrangement Services Sale of travel-related services such as timeshares and discount vacation travel clubs via outbound telemarketing calls or mass emailing
Card-Absent Transactions MCC 5966—Direct Marketing—Outbound Telemarketing Merchant Sale of products or services using outbound telemarketing; examples include services such as unsolicited tech support desks or credit card protection
Card-Absent Transactions MCC 5967—Direct Marketing—Inbound Teleservices Merchant Adult content and services such as website subscriptions and video streaming
Card-Absent Transactions MCC 7273—Dating Services2 Dating and escort-related services such as online classified ads that include escort services or monthly subscriptions to dating websites
Card-Absent Transactions MCC 7995—Betting, including Lottery Tickets, Casino Gaming Chips, Off-Track Betting, and Wagers at Race Tracks Funding for games of chance such as placement of wagers on an outcome or purchase of chips at a gambling establishment
Cross-Border Card-Absent Transactions MCC 5122—Drugs, Drug Proprietaries, and Druggist Sundries Sale of prescription-required drugs
Cross-Border Card-Absent Transactions MCC 5912—Drug Stores and Pharmacies Sale of prescription-required drugs
Cross-Border Card-Absent Transactions MCC 5993—Cigar Stores and Stands Sale of tobacco-based products such as cigarettes, electronic cigarettes, vaping devices and smokers’ supplies

In the cases below, a particular activity within the general classification is considered as high-brand risk (rather than the entire MCC):

High-Brand Risk Activity Requiring Registration MCC Transaction Type
Cyberlockers and similar remote digital file-sharing services where uploaded content is accessible to the public or the service pays uploaders for content CC 4816—Computer Network / Information Services Card-Absent Transactions
Games of skill such as daily fantasy sports gaming where consumers pay a fee to enter and the outcome of the game is determined by skill instead of luck MCC 5816—Digital Goods—Games Card-Absent Transactions
Purchase of cryptocurrency, funding of crypto wallets or funding of initial coin offerings (ICO) MCC 6051—Non-Financial Institutions— Foreign Currency, Non-Fiat Currency (for example: Cryptocurrency), Money Orders (Not Money Transfer), Account Funding (not Stored Value Load), Travelers Cheques, and Debt Repayment Card-Absent Transactions

Effective date

  • Revisions regarding dispute condition 10.5 are effective immediately – October 2020.
  • Revisions regarding the Standard timeline of VFMP will be effective as of the 1st of April 2021.