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March 18th, 2010

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11:36 am - As an end-user, you will never have to deal with this
This will not likely interest anyone else, but I'd like to vent, if I may, about Visa. Yes, that Visa. The one that has their name and holographic "flying V" logo all over your credit history.

Visa's great, at least from a consumer standpoint. It can be a powerful tool for building a good credit history and raising your standard of living more quickly than might happen otherwise. Of course, most people get into a little trouble at some point and fail to use good judgment... Quick show of hands, how many of you have ever gotten into fairly serious debt because you misused your Visa card? I suspect most of you not raising your hands get into debt with your MasterCard. Or Discover or American Express Card. Or maybe you just don't engage in rhetorical hand raising.

Visa muscled themselves into the honor of Biggest Electronic Payment Brand by undercutting and outbidding, and then throwing their weight around. It's fairly appalling behavior, unless you're one of their customers, in which case it's fantastic, because your card is accepted everywhere. Every major brand does this. Anybody who doesn't is just not powerful enough, or lacks the aspiration to become a major brand. You already know this.

Anyway, Visa and MasterCard both have well-defined dispute procedures. They provide the regulations and data processing framework for disputes, but they generally don't touch disputes themselves. If the cardholder's bank and the merchant's bank can't reach a consensus as to who is responsible for the money, the case can be sent to Visa or MasterCard for arbitration, which costs the loser a few hundred dollars. I'd guess that most disputes are between $30 and $80, so usually somebody just gives up and writes it off.

If they don't write it off and the case does get filed, the outcome is based ostensibly on the regulations, but is, in fact, a complete crapshoot. MasterCard's arbitration staff will decide against anybody who makes an obvious technical error, but if everybody is in compliance, they seem to rely on gut instinct. Identical cases ruled by different people can have drastically different outcomes. Visa, on the other hand, is a lot more predictable. Is the other bank bigger than yours? Do they give Visa more business than you do? Are they located in a geographical area where Visa doesn't have a big presence yet? If the answer to any of these questions is yes, then you'll probably lose.

And that's really the point of this post. I had two cases with exactly identical circumstances. The other side of the argument, in one case, is a small, community bank in Utah, and the other one is one of the five biggest card-issuers in the United States. Actually, I have their Visa card. Anyway, I needed clarification on one of Visa's regulations, and I sent them an e-mail saying, "hi, I'm working with two cases, here are the facts for each, blah blah blah, if I read the regulations correctly, the merchant failed blah blah blah, should I file these cases?"

And Visa's answer was "yes, absolutely. This is a clear cut situation, and the merchants are absolutely not entitled to that money."

So I filed the cases. And I won the case against the small bank, and I lost the case against the large bank. And then I got into a little argument with Visa, and we've swapped several messages back and forth. Here are the last few messages of the exchange, paraphrased for length and confidentiality:

Visa: You lost the case because you failed to exercise chargeback reason code XX, which was the proper dispute reason.

Me: But chargeback reason code XX is invalid for transactions that match condition ZZZZ, and per the report you've sent me, this transaction matched condition ZZZZ.

Visa: That is correct. Reason code XX would have been invalid for this transaction. You lost because you used reason code XX instead of YY, which would have been the proper dispute reason.

Me: You are giving me contradictory information. YY IS the reason code I used. You're telling me that reason code XX -- invalid in this case -- would have been the proper dispute reason. Additionally, I was told in an email sent by your staff in February that the merchant is not entitled to this money, under the terms of regulation OMGBFD.

Visa: That is correct.

Me: So the ruling doesn't make sense.

Visa: The ruling is final. You are welcome to escalate this ruling to our appeals process if the transaction amount -- which is $14.99 -- meets or exceeds our minimum appeal amount of $5,000. This is the last response you will receive regarding this case.

So anyway, what was my point? Oh yeah, Visa is terrible, and now I have to personally account for the $550 case filing fee. Our client is out $564.99 because Visa gives bad advice. Business as usual, really. I'd stop using their card if my bank would stop rewarding my wreckless spending with Amazon.com gift certificates.
Current Mood: angryangry
Current Music: Black Cinderella Two Goes East

(6 comments | Leave a comment)


[User Picture]
Date:March 18th, 2010 06:53 pm (UTC)
Wow, that's kind of crazy.
[User Picture]
Date:March 20th, 2010 02:33 am (UTC)
I was going to recommend another card, but they still go through Visa. We're working out way down to a goal of only using our card for gas. Everything else will be cash, paper checks, or electronic transfer from our bank.
[User Picture]
Date:March 20th, 2010 02:36 am (UTC)
*bank = credit union
[User Picture]
Date:March 21st, 2010 06:47 am (UTC)
This is part of the reason I don't have a credit card. The card companies (And most banks that carry them) are too big to have a soul, or a brain for that matter. So things like this happen all the time.

The other reason I don't have a credit card is because I don't see what the problem is with saving money and paying cash for things. If I don't have cash for something, I don't get it.

Too many people today put too much emphasis on their FIFCO score, which in all reality is an I love to be in debt score.
[User Picture]
Date:March 21st, 2010 08:48 am (UTC)
Oddly, I spend more when I have cash cause I know I actually have it. With a card, I try to spend as little as possible so it's not too high when the bill comes.
[User Picture]
Date:March 22nd, 2010 04:53 pm (UTC)
On the one hand, I really, really agree with you. Companies behave like sociopaths because it's good for the bottom line. On the other hand, there are really good reasons to have a certain amount of well-maintained debt. My parents never bought anything on credit, and their lack of a credit score prevented me from getting any kind of student loan until I was old enough and responsible enough to shoulder the burden myself. I didn't get a credit card until I'd already seen a lot of my friends get into trouble with theirs, and I'd like to think that I've been pretty smart with mine. I'm not sure what kind of emergency I'm saving it for, but one day, if I do get into an emergency, I'll have it.

Incidentally, though, debit cards have really changed the electronic payment industry. The number of credit cards has been steadily shrinking for about 10 years. The recession has made it more difficult to recognize the long-term trends, but what I think this means is that we're more in love with the convenience of cards than we are with the ability to buy now and pay later. Like it or not, we're moving away from paper money.
As an end-user, you will never have to deal with this - Garmonbozia for the soul. — LiveJournal

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