How Can Merchants Prepare for VAMP

VAMP is on the horizon, and merchants won’t be able to avoid the impact of this new Visa monitoring program. The only course of action is to prepare now to ensure your operations and analytics are ready before the new monitoring window opens on April 1, 2025.

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For subscription merchants, the urgency is even higher—review your dispute and fraud numbers immediately. Reducing dispute and fraud ratios can take several months for recurring subscription merchants due to the 120-day window card brands give consumers to dispute charges. A single customer with a monthly subscription can dispute up to four charges in one month, and with multiple customers, these disputes and fraud claims can accumulate quickly. You may be facing a significant amount of dispute and fraud exposure lurking under the surface of your recurring payments, leading to serious issues in just six months—without many viable options for resolution.

You need to act now! Not sure how to measure or manage your dispute and risk exposure? Slyce360 has the tools and expertise to support and guide you every step of the way.

Here’s the roadmap for how merchants can urgently prepare for VAMP:

1. Calculate Your Current VAMP Ratio

The first step is to calculate your current VAMP and Enumeration ratios, as outlined in our previous post, “What We Know About VAMP.” Do this now, especially if you already have fraud, RDR, or CDRN data. It’s critical to understand where you stand in relation to the various thresholds. If needed, take action before the end of the year to begin reducing your VAMP and Enumeration ratios. Even if all you can do is calculate your overall fraud rate, you’ll at least establish a baseline for your maximum VAMP ratio. From there, you can determine whether enrolling in programs like RDR or CDRN will be necessary, or if immediate operational changes are also required.

2. Implement Strong Fraud Prevention and Security Tools

Now is the time to urgently review your fraud and security procedures to ensure you’re doing everything possible to minimize real fraud. Criminals are always on the lookout for the easiest targets—don’t let your business be one of them. Strengthen your fraud prevention strategies by incorporating advanced tools and processes to proactively identify and block suspicious activities before they become major issues.

Key fraud prevention measures include:

• Tools like 3-D Secure, Address Verification Service (AVS), and Card Verification Value (CVV) checks to prevent fraud before it occurs.
• If additional support is needed, consider partnering with a dedicated fraud prevention service to provide immediate, real-time protection and strengthen your defenses.
• Prevent enumeration attacks by implementing the following strategies:

• Pre-authorization fraud tools that detect and block suspicious activity before it escalates.
• Velocity checks on outgoing connections to your payment gateway to detect anomalies early, before they turn into major issues.
• Log-in error messages that don’t reveal information about valid credentials to potential hackers.
• Multi-factor authentication (via text or email) to slow down fraudsters and add an extra layer of security.
• Log-in hurdles like Captcha to deter hackers from targeting your site.

For more information on implementing fraud prevention and security tools, Visa provides an in-depth guide on best practices for anti-enumeration and account testing. This resource covers strategies for mitigating fraud, protecting sensitive data, and enhancing transaction security, which are crucial for businesses managing high volumes of card-not-present (CNP) transactions.

You can find Visa’s full guidance here: Visa Anti-Enumeration and Account Testing Best Practices.

This document is especially valuable for understanding specific tools and methods Visa recommends for merchants to strengthen their fraud prevention frameworks.

3. Use Dispute Mitigation Resolution Tools

If you are close to or exceeding the VAMP thresholds, it’s crucial to partner with Verifi or a mitigation service provider to enroll in all applicable Visa mitigation programs. Focus especially on the Rapid Dispute Resolution (RDR) and Cardholder Dispute Resolution Network (CDRN) programs, as these can significantly help reduce your VAMP ratios and mitigate potential risks.

You should also immediately start working with your acquiring partner to access your TC 40 fraud data. If your acquirer cannot provide this data, work with Verifi or your mitigation service provider to enroll in the Inform Fraud Dispute Notices so you can monitor the amount of TC 40 fraud you’re receiving each month.

However, simply ingesting RDRs and CDRNs isn’t enough. The only way to lower your VAMP ratio with these products is by actively decisioning and refunding these alerts so that disputes are marked as “resolved.” Resolved means that you’ve refunded the customer, avoided the chargeback, and if TC40 fraud was reported, it gets removed from your VAMP ratio’s numerator, effectively lowering your overall threshold.

Another important factor to keep in mind is that when an initial fraud dispute is filed, TC40 fraud is typically reported immediately, often before you’ve had the chance to resolve the dispute using Visa’s mitigation products. As a result, you will likely need to subtract any resolved disputes from your TC40 data regularly. This calculation will be a constantly moving target, requiring close attention to ensure accurate tracking.

4. Improve Customer Experience

Enhancing your customer service processes is one of the fastest ways to reduce complaints and improve your VAMP ratio.

Start by ensuring that all your communications are clear and transparent:

• Billing descriptors: Double-check that your billing descriptors are accurate on customer statements. Ensure the correct phone number or URL is displayed, and that your product and company names are easily recognizable to avoid confusion. Don’t just look at what you’re sending your acquirer(s) but perform test transactions on a variety of cards to see how your descriptors are showing on paper, online and through payment apps.
• Transparent onboarding: Ensure that the onboarding process for new customers is seamless and crystal-clear, particularly for subscription services. Provide detailed, step-by-step instructions that outline exactly what the customer is signing up for, including:
  • Pricing clarity: Make sure pricing, billing cycles, and any potential additional fees (e.g., shipping or taxes) are clearly stated upfront. Avoid surprises by providing clear details about how and when they will be charged.
  • Subscription terms: Clearly explain the subscription terms, including trial periods, automatic renewals, and how they can cancel or modify their subscription easily. Transparency here helps prevent misunderstandings and reduces the likelihood of disputes down the road.
  • Product or service details: Give customers detailed descriptions of what they will receive as part of their subscription or purchase. Use visuals like product images, service features, or a timeline to manage customer expectations.
  • Account setup instructions: Guide customers through setting up their accounts, including creating login credentials, managing their subscriptions, and accessing customer support. Provide a user-friendly interface for them to view and control their orders, payment details, and account settings.
  • Communication timeline: Let customers know when to expect future communications, such as shipping notifications, renewal reminders, or special offers. Providing a communication schedule helps build trust and reduces the chance of customers feeling uninformed.

• Streamlined Support: Make it easy for customers to contact you and resolve issues quickly.

• • Multiple contact channels: Offer a variety of communication channels (phone, email, chat, social media) so customers can choose their preferred method of contact.
  • Auto-responses: Set up auto-responses to acknowledge inquiries and assure customers that their request has been received.
  • Prompt responses: Aim to respond to inquiries within 24 hours to reduce frustration and prevent escalations.
  • Customer feedback: Encourage feedback through surveys or reviews and use this information to improve your service.
• Proactive issue resolution: Engage dissatisfied customers early to resolve issues before they escalate to chargebacks. Proactively reach out if there are known issues with orders and make refunds or exchanges easy and straightforward. The goal is to resolve problems before customers contact their credit card company, the Better Business Bureau (BBB), or state Attorneys General (AG).

5. Analyze Your Chargeback Reason Codes

A thorough analysis of your chargeback reason codes is essential for understanding the root causes of disputes and identifying actionable insights to reduce future occurrences. Different chargeback codes point to specific areas in your operations that may need improvement, and each reason code gives you a unique opportunity to take corrective action.

• Fraud-Related Chargebacks: If you see a high volume of fraud-related chargebacks (e.g., “Fraudulent Transaction” or “Card Not Present Fraud”), this could signal weaknesses in your fraud prevention efforts. In this case, you may need to implement stronger fraud detection tools, like 3-D Secure, AVS, or CVV checks, and ensure that you’re tracking fraudulent activity in real-time.
• Service-Related Chargebacks: For reason codes like “Product Not as Described” or “Service Not Provided,” take a closer look at your product descriptions, customer communications, and service delivery. One of the best ways to do this is to order and return your own product. How was your experience, and what can be improved? Ask yourself how can you provide clearer and more transparent information upfront to help prevent buyer’s remorse and avoid disputes down the line?
• Authorization-Related Chargebacks: Codes such as “Authorization Not Obtained” suggest potential issues with your payment processing procedures. You might need to ensure that all transactions are properly authorized before fulfillment, and that you’re maintaining compliance with card network rules and acquiring processor requirements. Regularly testing and reviewing your payment processes can prevent authorization-related disputes.
• Recurring Billing Chargebacks: If you notice an uptick in chargebacks due to “Canceled Recurring Transaction” or “Unrecognized Recurring Charges,” it’s critical to review your subscription billing practices. Ensure that customers can easily manage and cancel their subscriptions. Transparent subscription management tools will help avoid confusion and improve customer satisfaction, reducing the likelihood of disputes.

6. Track Dispute Data and Reconcile Regularly

The final step is to consolidate all your data to analyze and build a complete picture of your chargeback and fraud landscapes. Payments data alone is often insufficient—you’ll need to incorporate as much Customer Relationship Management (CRM) metadata as possible to help pinpoint the sources of fraud. For example, do you know how much fraud and disputes are being generated by affiliates marketing and selling your products? Are there multiple sources or SKUs you need to manage? Breaking down your chargeback and fraud data by multiple data points is crucial for identifying the root causes of fraud. This approach also ensures you’re addressing the specific source of the issue, allowing you to protect and retain good business.

Once your data is consolidated, you can begin benchmarking key metrics and identifying patterns. Regular reconciliation of this data will help you pinpoint areas for improvement and ensure that your strategies are working effectively. Additionally, it’s important to incorporate your RDR and CDRN data, as high levels of mitigation can lead to increased costs and may indicate an underlying risk problem that needs attention.

November 4, 2024