I’m trying to get a clear answer to a pretty direct question…
A sale is marked as follows:
This order passed 3D Secure authentication
This order is marked as high risk despite being authenticated using 3D secure
Question: If this were to later have a chargeback filed, does the 3D Secure “liability shift” mean that the card issuer is responsible for the charges? In other words, our store would not be responsible for reimbursing the chargeback?
I find the description of how 3D Secure authentication works to be unclear, specifically with respect to the term “costs of a chargeback or dispute.”
Payments that are sucessfully authenticated by 3D secure are protected by a liability shift. When a payment is authenticated with 3D secure, the liability for fraudulent chargebacks or disputes is shifted from merchants to card issuers. This liability shift results in merchants no longer being liable for the costs of a chargeback or dispute. However, card issuers have policies that remove liability shift protection if too many chargebacks occur. For example, Visa’s policy is that merchants who receive more than 7,500 USD in fraudulent chargebacks in one month are no longer able to shift liability to the card issuer.
I think most reading that description would understand that to mean that the credit card issuer would be responsible for the full purchase amount. But if that were true, it would be pretty significant protection that I would think would be emphasized a bit more to the merchants, to provide greater reassurance in these situations.
So to be clear…if I were to process the above transaction and it later was proven to be a fraudulent purchase, am I protected from having to reimburse any payment we received?
PS - For those who would see this and wonder why I would even bother, trust me, I’ve had multiple false positives in the past. The most common scenario I’ve found is when someone is acting as a buyer for a product, but they’re purchasing on behalf of someone else (e.g., someone within a large medical practice that has multiple locations that aren’t linked to the official billing address).
The other scenario is when someone lives outside the US, and they’re a legit buyer, but they rely on courier services to deliver their product to their home country. Courier services are like VPNs. Most people who use couriers (and VPNs) are not scammers, but most scammers use couriers (and VPNs). So often times the fraud screening systems will automatically flag anyone purchasing with a VPN and/or using a courier.