Merchant Account Underwriting Tools

More On Tricky Fraudsters and ROSCA

Per our  previous post regarding Tricky Fraudsters Chapnick and Miller, termed as such by the FTC, underwriters should be aware of the Restore Online Shoppers’ Confidence Act. The cited case ( charges, among other things, a violation of this act that outlaws “data pass.” This practice has been a common source of chargebacks for many years.

“One major concern of ROSCA are transactions in which a consumer makes a purchase from an initial merchant and the initial merchant then – in an act known as “data pass” – transmits the consumer’s payment information to a third party, enabling the third party to sell the consumer an additional product or service with minimal additional consumer input.  Prior to ROSCA, the fluidity of the data pass and (in many cases) seemingly deliberate subterfuge by the initial and third-party merchants made it such that the terms – or even existence – of these post-transaction, secondary sales may not have been immediately clear to the purchasers.” (Benjamin Stein)

Having never heard of the entity shown as the descriptor on the card statement, the deceived  card holder initiates a chargeback.

Underwriters should also be familiar with the federal limitations on the use by merchants of “negative options,” another source of costly chargebacks. These are often part of the “free trial – shipping and handling” schemes.

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