Topic: Credit Card Network Rules
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A consumer customer notified us of an unauthorized Visa debit card charge within 60 days of receiving her periodic statement. We notified Visa, but Visa denied the customer’s claim because the merchant used “Verified by Visa” to confirm the identity of purchaser. We are not familiar with the “Verified by Visa” program. Do we still have to reimburse the customer for the charge?
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In our view, you are required to reimburse the customer for debit transactions that you determine are unauthorized, regardless of whether the transaction was verified through the Verified by Visa program. Our understanding of the Verified by Visa program is that it is a free service for cardholders intended to verify customer identity during online…
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Although we are not required to notify customers about the Visa Account Updater (VAU) program, shouldn’t we disclose to our customers that it is available?
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Although not expressly required, there are practical reasons to notify your existing customers about the VAU program and of their right to opt out, and also to include the opt-out right in your new account agreements going forward. For example, some customers may perceive the program as a violation of privacy — or simply may…
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We issue MasterCard debit cards, and we received an email from our core processor that we have to participate in MasterCard’s Automatic Billing Updater (ABU) program. This service requires us to notify MasterCard when a cardholder’s account information changes, so that merchants who have an existing relationship with the cardholder can continue to process recurring payments without an interruption in service. We are required to participate in the program, but customers may opt-out. We will review our privacy policies and account agreements, but what state privacy laws or notice requirements should we be aware of with respect to the ABU program?
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We are not aware of any federal or Illinois law that would require you to provide notice about the MasterCard ABU program and opt-out option to your debit card customers, although we believe it may be prudent to do so. Regulation P generally prohibits a bank from sharing nonpublic personal information about a consumer to…
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Are we required to notify our debit card customers about their ability to opt out of the Visa Account Updater (VAU) program that Visa requires us to implement in October 2017? This program requires us to notify Visa when a cardholder’s account information changes, so that merchants who have an existing relationship with the cardholder can continue to process recurring payments without an interruption in service. We are required to participate in the program, but customers may opt-out. There are no customer fees or other changes associated with this new program. Also, because this is an information sharing issue, we want to make sure we will not violate any privacy laws if we do not notify our existing cardholders about new service and opt-out option.
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We are not aware of any federal or Illinois law that would require you to provide notice about the VAU program and opt-out option to your debit card customers, although we believe it may be prudent to do so. Regulation E requires debit card issuers to notify customers about changes to certain terms and conditions,…
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Does the Visa Account Updater (VAU) program apply to credit cards? We recently started issuing Visa credit cards and were not aware of this program.
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Yes, the VAU program applies to credit cards. We spoke with a Visa representative who provides customer support for the VAU program. He clarified that the program applies to all Visa credit and debit cards. As a Visa card issuer, your bank must participate in this program. For additional information about the program requirements, your…
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We are planning to charge a convenience fee to customers who make loan payments with a credit card. We found that this type of surcharge is prohibited in Oklahoma. Does Illinois prohibit these charges?
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We are not aware of any Illinois law that prohibits so-called convenience fees that are charged for using a credit card to pay for a transaction, including the use of a credit card to make a loan payment. The Illinois Interest Act generally authorizes banks to charge reasonable loan-related fees, provided they are agreed to…
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We received an “AML ETF Questionnaire” from Visa. The questionnaire requires us to list all board members and key executives. It also requires a name and percentage of ownership for each of our stockholders, which we view as private information (we are not publicly traded). Visa is threatening to impose large fines (over $10,000) if we fail to complete the survey. Are other institutions submitting this information?
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Yes, other Illinois institutions have reported receiving similar surveys, although the surveys do not always require that level of detail about staff and ownership that Visa is requiring from your bank. We do recommend completing the survey, assuming that it is required by your contract with Visa. One IBA member shared a possible solution with…
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We are putting together account disclosures for business and consumer debit cards, specifically regarding error resolution under Regulation E. While Regulation E does not apply to business accounts, is there an Illinois law that might apply to business debit cards?
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No, we are not aware of any Illinois laws that would impose error resolution requirements on a business debit card. Moreover, as you note, Regulation E applies only to consumer-purpose accounts. However, we do recommend consulting with your bank counsel when drafting the account disclosures for your business debit card customers. In addition, as you…