Visa Compelling Evidence 3.0Visa Gives Merchants More Power to Stop Friendly Fraud

Is Your Business Ready for Visa Compelling Evidence 3.0?

Representing fraudulent disputes is a critical part of any chargebacks prevention strategy. The process can be intimidating, though, especially for beginners. Proper timing, accurate rebuttal letters, and a knowledge of reason codes are all factors when attempting a reversal.

One of the most confusing elements of representment, though, is compelling evidence. This refers to any documentation that shows a claim was unwarranted, and the initial transaction should stand. Visa has rules as to what constitutes compelling evidence, but those rules are necessarily imprecise, so as to cover multiple different circumstances. For the merchant, that can make the whole process feel somewhat subjective at times.

Visa’s Compelling Evidence 3.0 (or “CE3.0”) initiative was designed to help remedy that problem, as well as streamline representments for all stakeholders. As a merchant, you’ll have an expanded, more specific set of potential evidence that can be presented through simplified protocols. Now, users of Order Insight will be able to classify qualifying chargebacks as fraudulent and block them before they are even filed.

Let’s take a closer look at CE3.0, and find out how it can save time, money, and revenue for merchants like you.

What is Visa Compelling Evidence 3.0?

Compelling Evidence 3.0

[noun]/kəm • pel • iNG • ev • ə • d • ns/

Visa Compelling Evidence 3.0 is a set of guidelines and evidence requirements for disputes. It provides a standardized framework for all parties involved in the chargeback process, enabling merchants to substantiate claims by sharing real-time information, and prevent disputes marked with Visa reason code 10.4.

Cardholders have the right to dispute unauthorized charges on their credit card statements. There are times, however, when a disputed transaction is actually valid: the customer may have called the bank in error, or they may be trying to game the system to engage in cyber-shoplifting. In either case, chargebacks filed without legitimate cause are considered first-person misuse, or “friendly fraud.”

Visa’s core rules (effective as of April 2023) have now introduced Visa Compelling Evidence 3.0 in response to this problem. This new ruleset expands the list of compelling evidence you can use to help undo an invalid customer dispute. In many instances, updated guidelines and parameters will be able to automatically identify a dispute as invalid and block it.

The new rules center on historical purchase evidence. If a merchant can provide evidence that certain elements (device fingerprint, IP address, etc.) used in the transaction being disputed were also associated with two previously undisputed transactions, the fraud claim will be denied.

CE3.0 was implemented to make the representment process more efficient, transparent, and fair. It specifically applies to disputes filed under Visa reason code 10.4: Other Fraud — Card-Absent Environment. This reason code is often associated with friendly fraud due to its generic, open-ended nature.

Why is Visa Compelling Evidence 3.0 Necessary?

As we mentioned, fighting any dispute hinges on compelling evidence. But what makes any given piece of evidence “compelling?”

According to Visa guidelines, compelling evidence is defined as “proof the cardholder participated in the transaction, received the goods or services, or benefited from the transaction.” The documents that constitute compelling evidence are predetermined based on the type of chargeback in question.

Under legacy regulations, Visa merchants could only challenge a reason code 10.4 chargeback using a single previous transaction as evidence. All of the following data was required to match the dispute in question:

• IP Address
• Email Address
• Physical Address
• Telephone Number

Note that this information was only a prerequisite to challenge the chargeback. It still didn’t guarantee a reversal. In fact, if this was the only proof you had, the odds of winning the case would be low. Visa Compelling Evidence 3.0 was developed as a way of helping merchants mitigate losses to invalid disputes.

What are the Visa Compelling Evidence 3.0 Qualification Criteria?

The new CE3.0 rule set allows you to produce two previous transactions in response to a dispute. Neither of these transactions may have been previously reported as fraud. Both transactions must have been made more than 120 days — but also fewer than 365 days — before the dispute in question.

At least two data points (IP address, email address, physical address, telephone number) from the previous transactions must match the current transaction being disputed. You may also use device fingerprint or account login ID to validate a transaction, although at least one of the submitted data elements must be the IP address or the device ID. 

Just reading about it can make it seem a little confusing. So, here’s a side-by-side look at the old and new rules:

	Current Requirements	CE 3.0 Requirements
Number of prior purchases (undisputed)	1	2 or more
Items required to match between prior undisputed purchases and transaction in question	All of the following: IP address, Email address, Physical (shipping) address, Telephone number	At least two of the following: Customer account/login ID, Delivery address, Device ID/device fingerprint, IP address
Time frame for undisputed transactions used as evidence	None	Processing date must be more than 120 days, but fewer than 365 days, before the transaction in question
Submission	In dispute response	Either pre-dispute or in dispute response

There are also a few situational exceptions. For example, if you deal primarily with subscription customers, you may not have a matching IP address or device ID on recurring transactions. Instead, you may use an initial subscription billing transaction evidence, assuming it has not been previously disputed.

How Visa CE 3.0 & Order Insight Work Together to Resolve Disputes

Working through Order Insight, you can actually block false dispute claims before they’re even filed and avoid a chargeback. That should be reason enough to get on board. But, even if you’re not using OI, Compelling Evidence 3.0 does still make it easier to represent false fraud claims after the fact. 

To fully illustrate how Order Insight use CE3.0 to help you deflect chargebacks, let’s compare the pre- and post-dispute processes:

Submitted Pre-Dispute	Submitted in Dispute Response
Prevents dispute	Dispute response (representment) still required
Claim cannot escalate to dispute	Dispute cannot escalate to arbitration
No monetary loss, no fees	Chargeback fees still apply
No impact to fraud ratios	No impact to fraud ratio
No impact to chargeback ratio	Chargeback ratio is impacted
Must be enrolled in Order Insight	Order Insight not required

Pre-Dispute 

The pre-chargeback application of CE3.0, as facilitated through Order Insight, goes something like this: 

Let’s say a customer disputes a transaction, and the bank attempts to initiate a chargeback using a 10.4 reason code. Visa pre-selects up to five previous purchases from the same account, on which no active fraud reports or fraud disputes took place. Qualified historical transactions will be identified systematically by Visa and submitted to participating merchants as Order Insight inquiries. You would then need to return the data elements outlined in the qualification criteria for two or more of those pre-selected transactions.

Next, Order Insight will validate the data and then pass it along to Visa to assign liability. If criteria are met, the pre-dispute will be blocked, and liability for the transaction will remain with the issuer.

Post-Dispute 

Aligning with the existing process, representment cases will require you to identify and collect details for two prior transactions for the same cardholder. Again, these claims must have happened between 120 and 365 days before the attempted dispute date. 

Your acquirer will then deliver the response package via Visa Resolve Online (VROL), where the CE3.0 data elements will be validated. If the data elements from the historical transactions meet the qualification criteria, the response will be deemed successful.

In other words, if a chargeback does get filed, you’ll still benefit from CE3.0 rules, significantly increasing your chances of a reversal. If the chargeback has already been filed, though, you’ll still have to pay the chargeback fee. The dispute will also be reflected in your Visa chargeback rate. 

For these reasons, dispute prevention using Order Insight is generally a more effective way to go. Click below to learn more about how to take advantage of this platform and prevent chargebacks today:

Learn more about Order Insight

Advantages of Visa CE 3.0

CE3.0 helps to promote transparency and accountability by requiring that all parties adhere to these guidelines. Issuers and acquirers are held to the same standards when evaluating a chargeback dispute, ensuring a more level playing field for all parties.

Visa Compelling Evidence 3.0 benefits for merchants with qualifying transactions include:

Compelling Evidence 3.0 can help merchants and financial institutions better handle and resolve disputes. However, it's essential to recognize that CE3.0 can’t be a “one-size-fits-all” solution.

Are There Any Disadvantages to Visa CE3.0?

Visa Compelling Evidence 3.0 is a significant step forward in the fight against fraud and chargebacks. There are no real downsides to the use of CE3.0. That said, it shouldn’t be thought of as a panacea for chargebacks, as it won’t help you resolve every dispute.

If you’re dealing with a new customer, for example, CE3.0 won’t really come into play because the historical data won’t yet exist. Also, while not exactly a downside, some types of merchants will benefit from the new regulations more than others.

To provide another example, CE3.0 could be a huge help for merchants using a subscription business model. If you’ve been billing the same card the same amount every single month, finding matching transactions should be a snap. It may be less useful for merchants that tend to have“one-off” purchases, though.

Ultimately, CE3.0 serves as a solid foundation for improving the chargeback process. But, at the end of the day, it's only one piece of a broader solution to effectively manage chargebacks.

What Should I Do Now?

If you’re looking to get the most out of Compelling Evidence 3.0, here are a few tips to get you started:

The value of chargeback help from Cb911 isn’t limited to CE3.0 implementation. Our experts can help you discover the true sources of all your chargebacks, and help you implement a comprehensive chargeback management strategy to retain revenue and prevent future disputes.

Ready to get started? Or, just want to learn how much you stand to save? Contact us today to learn more.