Visa Fraud Monitoring Programs

Visa has two separate fraud monitoring programs, each of which monitors your account for fraud, defines different non-compliance thresholds, identifies when merchant accounts have excessive fraud activity, and requires merchants to reduce fraud to remain compliant with Visa's standards.

• Visa Fraud Monitoring Program (VFMP) [ Global ]
• Visa Fraud Monitoring Program - 3D Secure (VFMP-3DS) [ US Only ]

Visa identifies a merchant by descriptor and will review the activity under all descriptors monthly for merchant accounts exceeding the thresholds.

For general information about card brand monitoring programs and important terms, visit the Card Brand Monitoring Program's Overview article.

Visa Fraud Monitoring Program details

The Visa Fraud Monitoring Program monitors your merchant account. It uses the fraud amount and ratio to determine which threshold your account meets. Based on the threshold and identification month, you will be assessed different levels of fines. The violation statuses dictate whether your account is eligible for fines or other adverse actions.

Identification month refers to the number of months your account has exceeded the established thresholds. For example, the first month over thresholds, your identification month is Month 1, the second month exceeding thresholds, your identification month is Month 2.

The formula the Visa Fraud Monitoring Program uses to calculate your Visa fraud ratio is the amount of fraud (USD) reported in a given month divided by the amount of sales processed in the same month (example: June fraud amount / June sales amount).

note

Reported fraud is any incident of a fraudulent transaction that is reported to the card brands by issuing banks. The issuing bank may or may not initiate a dispute on these transactions for various reasons (e.g. nominal dollar amount). Therefore, reported fraud and disputes are separate reported figures.

Thresholds

If your merchant account meets the non-compliance thresholds, you could be flagged with one of the following: Early Warning, Standard, Excessive, or High-Risk.

Both fraud count and fraud ratio must be met to be flagged in one of these thresholds:

* Early Warning threshold is not a violation or associated with fine assessments. It is merely an alert that your merchant account is getting close to the violation, which starts at the Standard threshold.

note

Before October 1, 2019, the threshold ratios for the Visa Fraud Monitoring Programs were different:

• Early Warning threshold - 0.75%
• Standard threshold - 1.0%
• Excessive threshold - 2.0%

Violation statuses

There are three violation statuses:

• Notification: The first month that your account is identified in the Standard threshold - there are no fines in this stage
• Workout: The series of months following the Notification that your account is meeting the thresholds where Visa provides time to address the fraud issue - there are no fines in this stage
• Enforcement: The first month and any subsequent months that your account is meeting the thresholds and eligible for fines as well as other potential adverse actions sanctioned by Visa

A 10.5 Dispute Reason Code is a code that refers to fraud disputes where the card issuer was permitted to dispute the fraudulent transaction on behalf of the cardholder. The typical fraud dispute reason code for Visa is 10.4. However, when you become eligible for a 10.5 Dispute Reason Code in the Visa Fraud Monitoring Program, you will most likely receive more fraud disputes.

You may only contest 10.5 Dispute Reason Code cases it can provide proof of one or more of the following conditions:

• A refund was processed before the dispute
• A prior dispute on this transaction was already accepted
• Written proof from the cardholder that they are no longer disputing the transaction

Fines

The fine assessments or penalties for the Visa Fraud Monitoring Program are:

* Disqualification means your merchant account would no longer be able to process Visa payments.

NOTE

Effective October 15, 2022, all Australian merchants must enable EMV 3DS and other fraud prevention solutions. Merchants identified in the Visa Fraud Monitoring Program (VFMP) who have not enabled EMV 3DS will be subject to the High-Risk MCC timeline outlined earlier.

Visa can decide to place you in the High-Risk threshold at any time, typically due to high-risk Merchant Category Codes (MCC) or risky processing behaviors. After being flagged in the Excessive or High-Risk thresholds, you will remain at that enforcement level until you exit the program completely. This means that even if your figures reduce to the Standard threshold, you will remain at the Excessive or High-Risk enforcement assessments. Additionally, Visa can require a third-party audit when in these programs.

Also, Visa does offer a non-compliance fine appeal process. However, to appeal an already assessed fine, be sure to be able to present new and compelling information not already shared with Visa in a prior remediation plan. Additionally, there is a USD 5,000 appeal filing fee. Any Visa appeal must be submitted within 30 days of the fine assessment date. Appeals can be incredibly challenging to win. Only consider this option if new information was discovered that would have prevented the violation.

Visa Fraud Monitoring Program - 3D Secure details

Visa has identified an account's threshold to be flagged in the Visa Fraud Monitoring Program - 3D Secure [US Only]. Visa uses your fraud amount and ratio to determine if your account meets these thresholds.

The formula for calculating your Visa Fraud Monitoring Program - 3D Secure fraud ratio is the amount (USD) of fraud reported on 3D Secure transactions in a given month divided by the amount of sales processed through 3DS in the same month (example: June 3DS fraud amount / June 3DS sales amount.)

Thresholds

If your merchant account meets the non-compliance thresholds, you could be flagged with one of the following: Early Warning or Standard.

Both fraud amount and fraud ratio must be met in order to be flagged in one of these thresholds:

* The Early Warning threshold is not a violation and is not associated with any fine assessments. It is merely an alert that your merchant account is getting close to the violation, which starts at the Standard threshold.

Fines

The fine assessments for the Visa Fraud Monitoring Program - 3D Secure are:

Remediation plan

If you have been identified in either Fraud Monitoring Program, a remediation plan may be requested by Visa. A remediation plan aims to show Visa what actions you are taking to remedy the situation and regain compliance. Information is also reviewed and considered when the card brand issues fine assessments.

The main details you should provide for your remediation plan include, but are not limited to:

• Business description
• Events leading to the increased fraud
• Actions taken to reduce fraud, including implementation dates
• Description of all fraud tools currently enabled

How to exit these programs

To exit each of Visa's programs, your merchant account must be below the Standard threshold for 3 consecutive months. After your merchant account has fully exited the program, any subsequent flaggings would start over at Month 1 of that program.

If you have any questions regarding these programs, check out our FAQ or Contact us.