APRP Chargebacks & Dispute Resolution 5 — Questions and Answers
Question 1: A merchant enrolled in Visa's Dispute Monitoring Program (VDMP) fails to reduce chargebacks within the remediation period. What is the MOST likely consequence?
- Visa may impose fines and ultimately disqualify the merchant from accepting Visa cards (Correct answer)
- The merchant's chargeback fees are temporarily waived during remediation
- The issuing bank absorbs all future chargebacks from that merchant
- The merchant is automatically transferred to Mastercard's monitoring program
Correct answer: Visa may impose fines and ultimately disqualify the merchant from accepting Visa cards
Merchants who remain non-compliant in Visa's monitoring programs face escalating fines and potential disqualification from accepting Visa payments.
Question 2: Which party bears liability for a card-present EMV chip transaction where the merchant has a chip-capable terminal and the issuer has issued a chip card, but fraud still occurs?
- The issuer (Correct answer)
- The merchant
- The acquirer
- The cardholder
Correct answer: The issuer
When both the merchant and issuer have chip capabilities, the issuer bears fraud liability because the chip technology should have prevented the fraud.
Question 3: A subscription merchant wants to reduce 'cardholder does not recognize' chargebacks. Which tactic is MOST effective?
- Using a recognizable billing descriptor that includes the brand name and contact information (Correct answer)
- Increasing the subscription price to deter fraud
- Requiring cardholders to sign a paper agreement
- Sending physical mail confirmations for each billing cycle
Correct answer: Using a recognizable billing descriptor that includes the brand name and contact information
A clear, recognizable billing descriptor directly on the card statement is the most effective way to prevent cardholders from disputing transactions they don't recognize.
Question 4: Under Mastercard's rules, what happens when a chargeback is submitted but the original transaction was processed with a CVV2 mismatch that the merchant ignored?
- The merchant loses chargeback rights and cannot represent the transaction (Correct answer)
- The issuer is fully liable for all resulting fraud
- The merchant can still win the chargeback with delivery confirmation
- The acquirer must automatically refund the merchant
Correct answer: The merchant loses chargeback rights and cannot represent the transaction
Ignoring a CVV2 mismatch shifts fraud liability to the merchant and eliminates their ability to represent chargebacks for card-not-present fraud.
Question 5: What is the PRIMARY purpose of a 'retrieval request' in the traditional chargeback process?
- To obtain a copy of the transaction documentation before initiating a formal chargeback (Correct answer)
- To retrieve funds that have already been transferred to the merchant
- To request that the card network retrieve a lost physical card
- To obtain the cardholder's personal information from the issuer
Correct answer: To obtain a copy of the transaction documentation before initiating a formal chargeback
A retrieval request (now largely replaced by automated processes) was a formal request from the issuer to the acquirer for a copy of the transaction record to investigate a cardholder dispute.
Question 6: A high-risk merchant processes mostly card-not-present transactions and wants to reduce friendly fraud chargebacks. Which tool provides the STRONGEST protection under Visa's rules?
- Visa Secure (3-D Secure 2.0) with successful cardholder authentication (Correct answer)
- Address Verification Service (AVS) alone
- Manual order review by staff
- IP geolocation matching
Correct answer: Visa Secure (3-D Secure 2.0) with successful cardholder authentication
Successful 3-D Secure 2.0 authentication shifts chargeback liability for fraud disputes from the merchant to the issuer, providing the strongest protection available.
Question 7: In arbitration between an issuer and acquirer over a chargeback dispute, who serves as the final decision-maker?
- The card network (Visa or Mastercard) (Correct answer)
- The acquiring bank's legal team
- The Consumer Financial Protection Bureau (CFPB)
- An independent third-party arbitration service
Correct answer: The card network (Visa or Mastercard)
The card network (Visa or Mastercard) serves as the final arbitrator in disputes between issuers and acquirers, with their ruling being binding on all parties.
APRP Chargebacks & Dispute Resolution 5
A merchant enrolled in Visa's Dispute Monitoring Program (VDMP) fails to reduce chargebacks within the remediation period.
What is the MOST likely consequence?