Dispute & Fraud Monitoring Programs

Card brands have chargeback monitoring programs that track your dispute and fraud levels. If you exceed what a card brand deems an acceptable level, they will place you in their dispute or fraud monitoring program. It's possible that you will be charged fees or fines until your dispute or fraud levels return to an acceptable level. In a worst-case scenario, a card network may determine your account should be shut down. Continue reading below to learn the details of each supported card network's monitoring program.

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Note

The following applies to all card brands listed below:

  • All conditions must be met for a merchant to qualify for each of these programs
  • Remediation plans are required
  • A merchant will be released from each of these programs after 3 consecutive months of below-threshold activity

American Express Chargeback Program

American Express monitors the number of chargebacks and inquiries on their network. The program description detailed here is not exhaustive. American Express may place a merchant in one of their chargeback programs for reasons not listed here. American Express may, at its sole discretion, place a merchant in any of the American Express Chargeback programs at any time.

American Express Thresholds

Chargebacks may be considered disproportionate if the monthly ratio of chargebacks (less chargeback reversals) to gross charges (less credits) exceeds 1% in 3 consecutive months.

American Express will send a participant a Seller Dispute Program Notification File to alert the participant of a merchant's status in the Excessive Chargeback Program. The participant will receive a warning notification for those merchants that meet the criteria below for 1 month.

Criteria:

Type of Threshold

Threshold

Monthly Net Chargeback

10

Monthly Net Transaction

50

Net-Chargeback-to-Net-Transaction Ratio

1%

An Excessive Chargeback Fee may be assessed for merchants who trend for 3 consecutive months. At that time, those merchants will automatically be enrolled in the Excessive Chargeback Program. The fee will not be assessed if any one of the criteria is not met within a given month while enrolled in the program. Refer to the American Express Technical Specifications for further information regarding the Seller Dispute Program Notification File. Merchants with a positive trend for 3 consecutive months will be removed from the Excessive Chargeback Program.

MasterCard Chargeback Program

MasterCard's Excessive Chargeback Program (ECP) has two levels, the Excessive Chargeback Merchant Program (ECM) and the High Excessive Chargeback Merchant Program (HECM). These programs allow MasterCard to oversee e-commerce merchant activity and prevent excessive chargebacks from occurring on their network. If a merchant exceeds the monthly threshold for chargebacks, MasterCard imposes penalties(fines) for noncompliance. They identify qualifying merchants by calculating basis points.

During an account’s identification in ECM/HECM, MasterCard can begin charging applicable fines in month 2.

ECM/HECM Criteria

Merchants are considered non-compliant in the ECM / HECM categories when the criteria are met for both the number of chargebacks and the basis points in the following table:

Monthly Criteria

Number of Chargebacks

Basis Points

ECM

100 to 299

150 to 299

HECM

300 or more

300 or more

Learn more about MasterCard's program and find their chargeback guide on their website.

MasterCard Fraud Program

MasterCard's Excessive Fraud Merchant Program (EFM) allows MasterCard to oversee e-commerce merchant activity by monitoring the total amount of fraud occurring as well as the number of transactions authenticated through EMV 3-D Secure (3DS) or Digital Secure Remote Payment (DSRP). If a merchant exceeds the monthly threshold for fraud, MasterCard imposes penalties (fines) for noncompliance. They identify qualifying merchants by calculating basis points.

During an account’s identification in ECM/HECM, MasterCard can begin charging applicable fines in month 2.

EFM Criteria

Merchants are considered non-compliant in the EFM when all 4 of the following criteria are met:

  1. The total dollar amount (or local currency equivalent) of fraud-related chargebacks is greater than or equal to EUR/USD 50,000
  2. The total number of fraud chargeback basis points (BPS) is greater than or equal to 50
  3. Merchant has at least 1,000 e-commerce transactions from the previous month in clearing
  4. The percentage of monthly clearing volume processed using 3DS (including Identity Check Insights [IDCI] transactions) or DSRP is less than 10 percent in nonregulated countries or less than 50 percent in regulated countries

Learn more about MasterCard's program and find their chargeback guide on their website.

Visa Chargeback Program

The Visa Dispute Monitoring Program (VDMP) monitors merchants that generate excessive chargebacks. Visa evaluates a merchant’s chargeback levels monthly. The VDMP has 3 program timelines that it may place a merchant in until they can reduce their chargeback levels.

VDMP Criteria

The table below breaks down the chargeback thresholds for each level of the VDMP- early warning, standard, high-risk, and excessive. Merchants are considered non-compliant in these VDMP categories when the criteria are met for both the number of chargebacks and the chargeback-to-sales ratio in the following table:

Program

Threshold

Early Warning

  • 75 chargebacks in a month
  • 0.65% chargeback-to-sales transaction rate

Standard

  • 100 chargebacks in a month
  • 0.9% chargeback-to-sales transaction rate

High-Risk

  • 100 chargebacks in a month
  • 0.9% chargeback-to-sales transaction rate
    and/or:
  • The merchant is or should be categorized with a high-brand risk merchant category code (MCC)
  • Visa determines that the merchant caused undue harm to the goodwill of the Visa payment system

Excessive

  • 1,000 chargebacks in a month
  • 1.8% chargeback-to-sales transaction rate

The VDMP’s standard, high-risk, and excessive timelines are 12-month processes within which certain actions must be completed. Keep reading to understand what happens when each of those thresholds is crossed.

Standard Thresholds

In the first month of the standard timeline, BlueSnap will notify the merchant that they’ve exceeded chargeback thresholds. This is the early warning period. In months two through four, BlueSnap must submit a chargeback remediation plan to Visa and implement it with the merchant.

Months five through 12 are the enforcement period. BlueSnap must ensure there is progress being made with the plan or make adjustments and resubmit the plan if not. They must continue with the plan until the merchant’s dispute levels are below program thresholds. During the VDMP enforcement period, Visa can begin charging applicable fines.

Excessive Thresholds

All 12 months of the excessive threshold timeline are considered the enforcement period. Every month, BlueSnap is subject to non-compliance assessments and fines.

In the first month of the excessive threshold timeline, BlueSnap must review activity to determine the cause of chargebacks and notify the merchant that they have exceeded chargeback thresholds.

In months two through 12, BlueSnap must submit a chargeback remediation plan to Visa and implement it with the merchant. BlueSnap must ensure there is progress being made with the plan or make adjustments and resubmit the plan if not. They must continue with the plan until the merchant’s dispute levels are below program thresholds.

Beginning in month seven, accounts are subject to applicable review fines.

Learn more about Visa's program and find their chargeback guide on their website.

Visa Fraud Program

The Visa Fraud Monitoring Program (VFMP) monitors merchants that generate excessive fraud transactions. Visa evaluates a merchant’s fraud levels monthly. The VFMP has 3 program timelines that it may place a merchant in until they can reduce their fraud levels. These are the standard and high-risk or excessive fraud program timelines.

Merchants are considered non-compliant in the VFMP categories when all of the thresholds are met/exceeded:

VFMP Criteria

Program

Threshold

Early Warning

  • $50,000 Fraud Amount
  • 0.65% fraud-dollar-to-sales-dollar-ratio

Standard

  • $75,000 Fraud Amount
  • 0.9% fraud-dollar-to-sales-dollar-ratio

High-risk

  • $75,000 Fraud Amount
  • 0.9% fraud-dollar-to-sales-dollar-ratio
  • And/or the merchant is or should be categorized with a high-brand risk merchant category code (MCC).
  • And/or Visa determines that the merchant caused undue harm to the goodwill of the Visa payment system.

Excessive

  • $250,000 Fraud Amount
  • 1.8% fraud-dollar-to-sales-dollar-ratio

Release from Programs

Merchants can be released from monitoring programs when they haven't exceeded program thresholds for three consecutive months.