Fraud
4870 Chip Liability Shift - Counterfeit Fraud
Details
This code applies when a cardholder disputes a transaction, claiming it was unauthorized and involved a counterfeit card. Under the EMV liability shift, if a merchant processes a chip card transaction without adhering to EMV standards, such as by using a magnetic stripe instead of a chip reader, the liability for counterfeit fraud may shift from the issuer to the merchant.
Timing to raise the dispute (Issuer/Cardholder)
Timing to respond to the dispute (Acquirer/Merchant)
How to respond?
To address a chargeback under Reason Code 4870, provide evidence that the transaction was processed in compliance with EMV standards:
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Proof of EMV Compliance: Documentation showing that the transaction was conducted using a chip-enabled terminal with proper chip verification.
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Transaction Logs: Detailed logs from the point-of-sale system indicating the use of the chip during the transaction.
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Authorization Approval: Records demonstrating that authorization was obtained from the issuer at the time of the transaction.
Providing clear and comprehensive documentation can help demonstrate that the transaction was legitimate and processed according to EMV guidelines, potentially leading to the chargeback being overturned.
How to prevent?
To minimize the risk of such chargebacks under 4870.
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Upgrade to EMV-Compliant Terminals: Ensure all point-of-sale terminals are capable of processing chip transactions.
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Train Staff on EMV Procedures: Educate employees on the importance of using chip verification and the proper handling of chip cards.
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Enforce Chip Usage: Require the use of chip functionality for all chip-enabled cards to enhance security and reduce fraud risk.
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Regularly Update Systems: Keep point-of-sale systems and software up to date to maintain compliance with the latest EMV standards.