Online fraud is still a big problem and as long as the number of online shoppers continues to grow, so will the

number of fraud cases. According to the European Central Bank there were 7.9 million cases of fraud with a value

of 1.16 billion euros in 2011 of which 56% took place in e-commerce.

European Merchant Services organizes the EMS RISK EVENT annually for retailers who are active in e-commerce

and multichannel. It is an excellent opportunity to increase your knowledge in the field of online fraud, risk

management and advanced fraud prevention and detection tools. We help you to stay ahead of online fraudsters

and to protect your online business by sharing the knowledge and experience of our fraud and risk experts, our

customers and our partners.

Do you want to attend next year’s EMS RISK EVENT?

Please contact the EMS Marketing Department at T +31 20 660 3054 or send an email to

marketing@emscard.com. For more information visit www.emscard.com/riskevent

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MasterCard and Visa Europe

Merchant Fraud Programs

EMS Risk Event - 24 September 2013

Peter Cohen – Manager Compliance

Merchant Fraud Programs

Agenda

• Introduction

• Knowledge check

• The Fraud Program Rules

• Relation with chargebacks and Chargeback Programs

• What EMS can do for you!

Will you be targeted by fraudsters?

Visa Fraud Programs

Europe Region Global Fines and consequences

• $ 15 000 of reported fraud; and • $ 25 000 of reported fraud; and

• 15 fraud transactions; and • 25 fraud transactions; and

• 7,5% fraud-to-sales ratio • 2.5% fraud-to-sales ratio

• $ 1 000 of reported fraud; and

• 3 fraud transactions; and

• 3 % fraud-to-sales ratio

• no Exit after 3 months Minimum; or • no exit after 3 months Minimum; or • Chargeback Window: full liability for all reported fraud

transactions

• $ 40 000 of reported fraud; and • $ 250 000 of reported fraud; and • Fines starting from $ 5 000

• 20 fraud transactions; and • 2,5% fraud-to-sales ratio

• 20% fraud-to-sales ratio (average

of 3 months)

3 consecutive months under Exit

thresholds

Excessive

Exit 3 consecutive months under Minimum

threshold

Minimum None

Exit within 3 months under Minimum

threshold

Europe Region Global Fines and consequences

• $ 15 000 of reported fraud; and • $ 25 000 of reported fraud; and

• 15 fraud transactions; and • 25 fraud transactions; and

• 7,5% fraud-to-sales ratio • 2.5% fraud-to-sales ratio

• $ 1 000 of reported fraud; and

• 3 fraud transactions; and

• 3 % fraud-to-sales ratio

• no Exit after 3 months Minimum; or • no exit after 3 months Minimum; or • Chargeback Window: full liability for all reported fraud

transactions

• $ 40 000 of reported fraud; and • $ 250 000 of reported fraud; and • Fines starting from $ 5 000

• 20 fraud transactions; and • 2,5% fraud-to-sales ratio

• 20% fraud-to-sales ratio (average

of 3 months)

3 consecutive months under Exit

thresholds

Excessive

Exit 3 consecutive months under Minimum

threshold

Minimum None

Exit within 3 months under Minimum

threshold

MasterCard Fraud Program

Violation Thresholds Fees and Fines

•Tier 1 • $ 3 000 of reported fraud

• 3 Fraud transactions

• 3 % fraud-to-sales ratio

None

•Tier 2 • $ 4 000 of reported fraud

• 4 Fraud transactions

• 5 % fraud-to-sales ratio

None

•Tier 3 • $ 5 000 of reported fraud

• 5 Fraud transactions

• 8 % fraud-to-sales ratio

• $ 15 000 for not submitting a response to

special audit questionnaire

• Chargeback liability for a period of 6-12

months for non compliance with Mastercard

recommended Fraud Control Action Plan

Merchant Fraud Programs

Relation with chargebacks and Chargeback Programs

Chargebacks and Chargeback Programs are unrelated to the Merchant

Fraud Programs!

‘3D Secure’, MasterCard SecureCode and Verified by Visa, are no silver

bullet.

Fully Authenticated fraud is out there…

(phishing is on the rise)

Merchant Fraud Programs

What EMS can do for you!

We inform you timely about Fraud Program related messages.

We can provide you with an overview of your authorisations and

transactions.

We can provide you with frequent EMS Fraud Reports.

We can advise on data analysis.

Merchant Fraud Programs

What EMS can do for you!

We can provide fraud prevention best practices:

- Compare country where card was issued against delivery address.

- Evaluate authorisation data.

- Evaluate multiple use of the same card (on the same day)

Merchant Fraud Programs

What EMS can do for you!

You can prevent or limit fraud from occurring by using all available

information and taking a step back from your business to be able to

clearly spot any unwanted authorisation and transactional patterns!

Why should I prevent fraud if my fraud performance is under the

Scheme Program criteria?

Merchant Fraud Programs