Avoiding charge backs

Patrice Peyret – CEO, Plastyc, Inc.

Reducing Charge Backsfor online purchases made by

teenagers and students

2

The Charge Backs Problem

with young users

Junior makes a purchase with a parent’s (or a friend’s) “borrowed”

credit card

Mom discovers the transaction after the facts and disputes it.

3

Typical sources of problems

Funds loading

Issuance

Funds mis-use

Repudiation of transactions

4000 GOODTHRU 03/1003/10 DEBIT

CARDHOLDER NAMECARDHOLDER NAME

40004000 00000000 00000000 00000000

4000 GOODTHRU 03/1003/10 DEBIT

CARDHOLDER NAMECARDHOLDER NAME

40004000 00000000 00000000 00000000

4

Tightening Issuance

Verify:– Consistency of [Name : Birth date : SSN]

– No match on OFAC list

of cardholder, or parent of minor cardholder

Out-sort manually user applications with low consistency scores or with OFAC hits

Verify physical address by sending prepaid card to billing address of funding credit card

(also avoids funding fraud)

5

Good Funding

From parent credit card– Use same billing address for parent credit

card and delivery of teen prepaid card

From parent banking account– Positive verification of account ownership

Parents have a separate online web access(from the teens) with their own username &

password

Plastyc takes liability for funding fraud => transactions done with disputed parental or other funding are not reversed

4000 GOODTHRU 03/1003/10 DEBIT

CARDHOLDER NAMECARDHOLDER NAME

40004000 00000000 00000000 00000000

6

Valid Purchases

If card is declared stolen or lost:– Plastyc implements Visa’s Zero Liability policy and covers any loss

from subsequent transactions

If card number is stolen and used in a card non-present transaction– Plastyc will not reverse the transaction if the online merchant has

linked its user namespace to Plastyc’s and provides usernames for disputed transactions

If online transaction is disputed by legitimate user– Plastyc will fight the repudiation if the online merchant has linked its

username space to Plastyc’s and provides usernames for disputed transactions

7

100% Cover for Partner Merchants

• Plastyc takes liability for the origin of funds:– No issuance to un-verified users– Funds from parents are indeed from parents– We don’t reverse purchases if funds are found to be disputed

• Plastyc takes liability for stolen/lost cards– Visa’s zero liability policy

• Plastyc takes liability for transactions with online partners:– If the namespaces between Plastyc and online merchants are

linked, then Plastyc will:• Fight repudiation with legitimate cards• Not reverse charges made with stolen card numbers

as long as online merchant confirms user ID with which the transactions were carried out