another example of the Credit Card industry's deceptive advertising targeting children
cartoon of the month

Thursday, June 02, 2005

Tourist Victim of Credit Card Fraud, India

Another Brit Expat defrauded in India.

Well sooner or later I had to get caught out by it :( I am currently in dispute with my credit card company (well not so much them as Textiles Fair Jaipur). When we were India last November we bought a carpet from a shop in Jaipur called Jalmahal Carpets. Now I am not a suspicious person but the longer I stayed in the shop the more uneasy I became. I know now I should go with my gut instincts. When we arrived the proprietor seemed a really nice bloke, showed us around the shop, demonstrated how carpets were made etc. etc. We are used to all this pre-sales blah as we live in Sri Lanka and have seen it many times before. However, when we went upstairs to actually view some carpets he announced it was his birthday and would we like some food and beer? My wife readily accepted but something made me refuse the beer, probably because I knew we were about to end up in a bartering situation, which after 12 months in Sri Lanka, I am still not imparticularly good at. All during the sale he tried to make me have a beer and I did relent but only once I had seen the carpet I wanted and decided how much I was willing to pay. In the end I got about 20-25% off the price of the carpet but experienced barterers say they could have got 40-50% knocked off. But hey, I was happy with the carpet and the price I paid so I've no issues.

I hadn't got enough money to pay cash so I produced the credit card, signed the receipt along with a couple of other documents, which I was told were local government documents (and they looked the part). Now when the proprietor was filling out the receipt he asked what the date was so I immediately assumed the front about his birthday was to put us in a good mood in the hope we would not barter him down and we left. (Had he really forgotten what day his birthday was on). I smiled and assumed that was all part of the bartering experience and we left, carpet in hand and went on to a restaurant.

When we got back from India I checked my credit card statement and I immediately noticed an entry I could not account for. It wasn't for much, 2700 rupees, for a company called Textiles Fair Jaipur but I simply could not match the entry up with any receipts and neither my wife nor myself could recall what it was for. So I rang the credit card company and requested the receipt and the transaction has been marked as in dispute. They sent my mother-in-law a copy of the receipt for us to check the signature, which my father did (We currently live in Sri Lanka and all my post goes to either my father or my mother-in-law in the UK). It matched. However, it was not the orginal receipt but a photocopy. I can guarantee I did not sign for it but I assume that the bogus receipt was placed under one the the documents I signed. Interestingly the transaction of the bogus receipt was 1 minute after the legitimate receipt. i.e. Jalmahal Carpets was 20:02 and Textiles Fair Jaipur was 20:03.

Alarmingly I also came across this thread, http://www.indiamike.com/india/archive/index.php/t-7162.html. Another person had been to the same shop and had one legitimate and one bogus transaction placed against their card using exactly the same two companies. So this appears to be a not uncommon occurrance with this shop.

Needless to say I have no intention of paying the bill. The amount is imaterial. I just don't like to be conned. It will be interesting to see the reaction of my credit card company. I assume I am not liable until the original, pen written receipt is produced but I know nothing about law. You'd assume that once a few people had complained about this the credit card companies would have some sort of agreement where they take the criminal to court and got him locked up ...

Anyway I thought I'd write this blog entry in case anyone else got caught out using this shop and does a search like I did on google. At least they will have two people to back up their claims of being conned.
Original Source

Shandy,

I read these kinds of testimonies all to often where I work. I do chargebacks for JP Morgan Chase credit cards. I would say that you were a victim of merchant fraud.

Some merchants will swipe your card once for the sale, but while they are doing so will swipe your card one more time. It could be a second Point of Sale Device right next to the one for the legitmate purchase.

The good news for your the consumer is that they are protected, however this protection can easily abused. With MasterCard an unauthorized dispute does not begin with a sales draft order unlike with VISA. A customer signs a form or sends in their own signed letter stating that the a specific sale is unauthorized. For MasterCard, the issuer commences an immediate chargeback for reason code 37. For VISA the issuer will order a sales draft if the point sale value is card present or keyed. However if the mail order telephone order (MOTO) indicator is present then an immediate chargeback is typically commence for reason code 75.

In any case the merchant must respond in representment if the merchant wants to keep the money for the sale. In other words the merchant responds to rebuttal the issuer's claim on the their customer's behalf. For MasterCard if the merchant can show that the card was present and there is a signature, a mark or any type of scribble in the signature line, then merchant wins the dispute hands down. That is true even if the signature is not yours. It could say Mickey Mouse or just have squiggly line and the merchant wins. At that point the issuer has no recourse to recover the funds, so what issuers often to do avoid a write off and rebill a customer's account and send the customer a letter with the sales draft enclosed saying, "Hey, this charge is good and we think you ought to pay it."

As a customer at this point you are still protected. Even though the merchant has won the dispute the customer is protected under Reg Z. All the customer has to do is write back the issuer and state that you have reviewed the sales draft, the signature and maintain as you originally did that the sale is unauthorized. Its not your signature.

At that point depending upon how much money we are talking about the bank may just write it off or look for ways to keep from writing it off. For some of you if your dispute just seems to keep dragging and dragging for month after month this is what is taking place. Banks do not like to write off money, however Reg Z says that an issue must write it off, regardless.

What is important to relize that Reg Z will not protect you if you have not requested that your account be closed and a new number issued. This espically true for MasterCard. If there is no account transfer a bank will use that to avoid a write off. The logic is that if it were truly unauthorized and your account number is compromised than why have you not taken the steps to prevent further unauthorized usage?

For VISA once the merchant provides sales draft then the issuer mails it to you with a fraud affadavit. If you sign it you basically stating that this not my charge. Once the issuer recieves the affadavit they will automatically close your account and reissue a new number, commence a chargeback for reason 84 (no signature), reason code 81 (no imprint), or reason code 61 (unauthorized moto). There are many other fraud reason codes however for VISA these are the top three. Like MasterCard, if the card was present and there is a signature, a mark or something present in the signature line then issuer has no chargeback rights and must do a Reg Z write off. Unlike MasterCard, the chargeback is done first, whereas VISA all the relavant data is ascertained first before a chargeback is commenced. For VISA the dispute has to be qualified so to speak.

Thougt you might find these facts interesting.

Information security leaks and chargebacks

Now British Credit Card issuers in England are releasing all their confidential data on UK customers to small insecure and unknown BPOs in India. God Save the Queen! What wont a nation of shopkeepers do to save a buck and damn the customers. HoHoHo

It's to our credit
Raja Simhan T.E.

A BPO employee in Chennai tracks credit card frauds in the UK... that's a scene straight out of Xansa Inc's offshore centres in India. High-end BPO services are now coming home to roost.

SITTING inside the Siruseri information technology park in Chennai, Meena is tracking the details of a credit card statement. The cardholder claims he has not made one of the purchases charged to him. This may sound like a routine check. But what is interesting is that the cardholder, whose purchase Meena is tracking, is in the UK and not India.

This high-end service called credit card chargeback is currently offered to a UK-based bank by the Indian offshore centres of Xansa Inc.

India is turning into an important destination for such high-end business process outsourcing (BPO). Chargeback happens whenever a cardholder disputes a credit card purchase. There are a variety of reasons why a cardholder may dispute a charge. These include not receiving the item ordered; not getting what they thought they were buying; the credit card was stolen and the charge was not authorised; and someone simply taking unfair advantage of the chargeback clause.

Xansa checks the veracity of each chargeback claim and helps the bank avoid paying unnecessary refunds. A leading bank that uses Xansa's services has recorded a 30 per cent increase in productivity due to enhanced recovery and a 50 per cent increase in recovery rate, says Amitabh Shrivastava, Director Operations (Chennai), Xansa. The company employs over 1,500 in Chennai, Pune and Noida.

A report by a leading international bank says that in the Asia-Pacific region, chargeback cost credit card members $25 million a year — $10 million for processing and $15 million in write-offs.

Cardholders have the right to dispute any transaction listed on monthly statements. The tracking begins with the customer services department contacting the cardholder. If the cardholder's claim is found genuine, a case is created in the system. The cardholder is sent a dispute form, which he/she completes and returns to the credit card company. Alternately, the cardholder sends a letter to the bank, disputing a transaction on his/her statement. The disclaimer letter is scanned and a case created in the system.

A Xansa employee calls the shop where the purchase was made in the UK, to verify the claims. The end-result of the process could be any of the following:


the disputed amount is returned to the customer, and the credit card company claims the amount from the merchant (or the merchant acquirer);

the claim is denied, and the customer is given the reason;

the amount is "written off" (when there are no existing chargeback rights, or it is a low-value transaction, or the transaction has timed out, or the case is identified as "fraudulent");

the disputed amount is returned to the cardholder and the case is transferred to the fraud department;

no action is taken, for instance, if the merchant issues a credit for the disputed transaction.
The entire process is handled from India, says Shrivastava. For banks, recovery from a single customer may be minuscule. But with the volume of chargeback increasing, the bank loses a substantial amount, he said. The origin of the disputes could range from "card not recognised" to counterfeit cards and Internet/ mail/ telephone orders, he says. Shrivastava declined to give the number of claims that Xansa processes from India, nor the number of employees working on chargeback.

According to Gartner, a research firm, approximately 1.1 per cent of online transactions are estimated to result in fraudulent-buyer chargeback.

That is like paying an extra 1.1 per cent fee on every transaction.

Chargeback risks vary depending on the type of goods sold, but nearly everyone who accepts credit card payments will face some chargeback risk, the report said.

An international bank's report states that in the Asia-Pacific region, online payments worth nearly $3 billion are made in a year. There has been about $25 million worth Internet-related chargeback in this region in 2000, and this is expected to grow to $300 million next year. The incidence of chargeback on the Web are ten times higher than in the physical world, the bank report says.

More Credit Card Chargebacks FAQ

Credit Card Chargeback Primer
By: John Conde, Published: 2005-04-29, Parent Category: Ecommerce

Nobody goes into business to lose money. You work hard for every penny, and every penny counts. To have that taken away from you months after a sale was completed is not only bad for business but extremely frustrating. Too many chargebacks usually spells doom for an online merchant.

The best tools for avoiding a chargeback are not available for online merchants. Retail-style businesses can perform certain actions that render them virtually bulletproof to chargebacks (they're still vulnerable, so don't be envious just yet). They can either swipe the customer's credit card through a processing terminal or get a manual imprint of the card. Plus they can get a signature on that receipt at the time of sale. All of these verify that the customer, merchant, merchandise, and credit card were present and satisfactory at the time of sale. Pretty hard to dispute that.

So what is an online merchant to do? Since giving up is not an option, education and prevention are an online merchant's best weapons. Having some basic policies and procedures in place can significantly reduce the number of chargebacks your business will receive. Below we will both educate ourselves as well as identify some strategies that will lower your potential for chargebacks.

What exactly is a chargeback?

A chargeback is when a customer initiates a refund for a purchase they made on a credit card by contacting their card-issuing bank. The reasons for this can vary greatly but generally is a result of a customer being dissatisfied with their purchase. The customer may or may not have contacted the merchant about remedying this situation ahead of time. They may even be completely wrong. However, responsibility falls on to the seller to ensure that the transaction goes smoothly and the customer is satisfied. A failure somewhere along the fulfillment process, including at the customer service level, can lead to a chargeback.


The Chargeback Process

The chargeback process is a largely unknown to merchants and can often be a cause of frustration. To assist merchants in understanding the chargeback process, I've provided the chargeback process used by Visa and MasterCard. American Express and Discover Card use a similar process. However, because they do not issue their credit cards through member banks there are fewer steps involved and the process is usually faster. The process is as follows:

1. The customer disputes a transaction by contacting their card-issuing bank

2. The card-issuing bank researches to determine whether the reasoning for the chargeback is valid. If not, the chargeback is declined and the customer is held responsible for the charge.

3. A provisional credit is provided to the customer. The card-issuing bank initiates a chargeback process and obtains credit from the merchant's processing bank.

4. The merchant's processing bank researches the validity of that chargeback. If they determine the chargeback is invalid they will decline the chargeback and return it to the card-issuing bank.

5. The chargeback amount is removed from the merchant's account and the merchant's processing bank provides written notification to the merchant.

6. Did a processing error occur? If so the sale is re-presented to the card-issuing bank for corrections.

7. The merchant provides documentation to remedy the chargeback. If the provided documentation is found to be satisfactory the chargeback is declined and the customer is once again charged for the sale. If the documentation is found to be unsatisfactory the chargeback is successful and the process ends.

As you can see, there are multiple steps involving multiple parties- each requiring their own amount of time to manage their responsibilities. A typical chargeback can take anywhere from six weeks to six months before it is resolved. If each party takes the maximum amount of time to complete their responsibility, it is not hard to see how a chargeback can seem to drag on forever.

Reasons for Chargebacks and Their Remedies
There are five different reason categories that chargebacks can fall into:

1. Point-of-Sale Processing Errors
2. Customer Dispute
3. Post-Transaction
4. Potential Fraud
5. Authorization-Related

We're going to cover three reason categories that most commonly apply to online merchants: Point-of-Sale Errors, Customer Dispute, and Potential Fraud. Within each category will be one or more common reasons for chargebacks. In parenthesis will be the chargeback code assigned to them by Visa and MasterCard. This is commonly used when notifying a merchant of a chargeback and has been included for your reference.

Point-of-sale processing errors

Incorrect Account Number (36) - The card-issuing bank identified the account number on the original transaction receipt as being different from the account number in the record deposited for payment (e.g. the merchant made a data entry error (keyed in the wrong account number for that particular transaction)). Remedy: Issue a credit back to the customer's credit card. Re-ring the original sale with the correct credit card number if possible. Further contact with the customer may be necessary to attain corrected credit card information.

Duplicate Processing (82) - The card-issuing bank received the same transaction more than once for posting to the customer's account. (e.g. The customer was charged twice for the same transaction). Remedy: Issue a credit back to the customer's credit card.

Customer disputes

Customer Claims Services Not Performed (30) - The card-issuing bank received a written complaint from a customer stating that a promised service was billed but never performed. Remedy: If the service was performed, send a copy of an invoice or contract signed by the customer and other evidence that the service was performed to the processing bank. If the service hasn't been performed because it was set to happen a specified date which has not passed, send a copy of the contract specifying that information to the processing bank.

Canceled Recurring Transaction (41) - The card-issuing bank received a claim by a customer that the merchant had been notified to cancel the recurring transaction and has since billed the customer, or the transaction amount exceeded the pre-authorized dollar amount range, or the merchant was to notify the customer prior to processing each recurring transaction and had not done so. Remedy: Issue a credit back to the customer's credit card.

Merchandise/Service Not as Described (53) - The card-issuing bank received a written claim that the goods or services were not the same as shown and described on the documentation presented to the customer at the time of the transaction (on the website) and the customer attempted to return the merchandise or to cancel the services. Or if services had already been rendered, customer attempted to resolve the dispute with the merchant. Remedy: If the customer has not returned the merchandise, notify your processing bank. The customer must attempt to return the merchandise before attempting a chargeback. If they have already returned the merchandise, or this is a service, issue a credit back to the customer's credit card.

Defective Merchandise (56) - The card-issuing bank received a written claim from a customer that merchandise received was damaged, defective, or unsuitable for the purpose sold, and the customer attempted to return the defective merchandise. Remedy: If the customer has not returned the merchandise, notify your processing bank. The customer must attempt to return the merchandise before attempting a chargeback. If the merchandise was returned, but is not defective, notify your processing bank. If they have already returned the merchandise, and it is defective, issue a credit back to the customer's credit card.

Customer Claims Merchandise Not Received (90) - The card-issuing bank received a written claim from a customer that merchandise ordered was not received or that the customer canceled the order as the result of not receiving the merchandise by the expected delivery date. Remedy: If the merchandise was delivered, send all evidence of the delivery to your processing bank. If the chargeback is attempted less then 30 days from the date of sale, send a copy of the transaction to the processing bank showing the 30 days has not yet passed since the sale was performed. Also be sure to state the expected delivery date. You are allowed a fair amount of time to deliver your product.

Potential Fraud
Fraudulent Card-Not-Present Transactions (61) - The card-issuing bank received a written complaint from a customer stating that he/she neither authorized nor participated in a transaction appearing on his/her billing statement. Remedy: If you obtained authorization approval, received an exact match to the AVS request (e.g., a match on the customer's street number and ZIP code), the merchandise was delivered to the AVS address, and you have proof of delivery, provide this information to your processing bank.

The Additional Burdens of Chargebacks
Besides losing the money earned from a sale, online businesses have additional costs, some monetary, some not, that additionally hurt their business. One cost rarely recovered is the cost of shipping merchandise in a disputed sale. If you shipped that package via overnight service to the customer chances are you lost an additional $35 - $100 on top of your lost sales revenue.

Even worse, if a merchant gets too many chargebacks, usually more than one or two percent of total sales, their merchant account will be terminated by their processor and the merchant will be added to the Terminated Merchant File (also called The Match File). This file is a blacklist that effectively prevents the merchant from ever accepting credit cards again. Needless to say it is important to keep chargebacks to an absolute minimum as online merchants have few options for accepting payment and none are as powerful as owning a true merchant account.

Even if your online business manages to keep its chargebacks below the 1-2% threshold, any chargeback you receive will require spending time researching the sale and gathering the necessary documentation requested by your processing bank. Every online business would rather spend that time promoting their business instead of defending its already completed sales.

Chargeback Prevention

The best way to deal with any chargeback is to prevent it from happening in the first place. The following suggestions are very generic and can be used by most businesses to decrease their potential chargeback potential.

Use a clear DBA (Doing Business As) name that customers will recognize. Vague corporate names that do not accurately describe what your company might do or sell will only confuse customers when they review their billing statements. An unrecognized DBA name on billing statements is one of the most common causes of chargebacks.
Put your phone number on your customer's statements. If they do not recognize your DBA they can call you to find out who you are and why you charged them.
Always respond to a chargeback as quickly as possible. There is a limited amount of time allotted to resolving a chargeback. If you miss the window of opportunity to respond, you forfeit your ability to fight the chargeback. If your processing bank has any more questions or requests, a quick response from you will ensure that they have enough time to get the relevant information from you.
Never accept an expired credit card.
Obtain authorization for the full amount of the sale. Declined transactions should not be accepted or split into smaller amounts.
Some disputes are not the result of unauthorized credit card use. Rather, they start because the customer disputes the quality of the goods or services purchased. The best way to avoid this type of chargeback is to work closely with the customer to establish a mutually satisfactory solution.
Balance each batch to the host or to your tickets; this will help prevent duplicate charges.
Call or fax any large or suspicious orders to ensure the order is legit. If you are unable to reach the customer, you might have been intentionally been given incorrect contact information.
Verify the customer's address. It is possible to verify the customer's name, address and phone number with the card-issuing bank. By calling the Voice Authorization Center for address verification, you can verify the address and also provide proof that you verified the address.
Always get signed proof of delivery. Be able to provide a shipping tracer log that shows that the customer received the shipped goods.
Charge the customer's account at the time the goods are shipped. If you know there will be a delay in delivery, wait to process your customer's credit card.
Be suspicious of high-ticket sales requested to be sent next-day air or if a runner will be in to pick up the purchase at a later time.
Use the fraud services offered by the processing bank including AVS (Address Verification) and CVV2.
Have your return/refund policy clearly stated on your website. Make it a requirement to read before processing the order.
Provide accurate descriptions and images of your products on your website.
Be very cautious of any foreign orders. Generally, orders from Asia, The Middle East, and most parts of Africa should be considered high risk.
Be wary of orders with domestic billing addresses but with foreign shipping addresses. They are usually fraudulent.
Be wary of orders where the customer is willing to pay more for faster delivery.

Summary
It's no secret that online merchants are at a disadvantage when it comes to chargebacks. With no credit card to swipe or receipt to sign, verification of a sale is voodoo at best.

There are new tools available, and more on the way, that aim to reduce online fraud and therefore reduce opportunities for chargebacks. Two similar technologies, Verified by Visa and SecureCode, by Visa and MasterCard respectively, will help to verify a customer's identity at the time of purchase. Unfortunately, at the time of this article was written, these technologies were not fully supported and have a limited impact on fraud.

So what is an online merchant to do? Exactly what you've always been doing: making your customers happy by offering them a great product or service, having a customer-centric customer satisfaction policy, and providing your customers with an overall positive experience. Just be sure to approach each sale with due diligence and you'll be keeping your hard earned money, not giving it back.
This article was written by John Conde. John has been in the credit card processing industry for three years and has established thousands of merchant accounts. He is currently forming JNA Merchant Services a sub division of JNA Web Services.

Credit Card Chargebacks FAQ

This article from the Office of the Attorney General of California clearly guides Americans how to fight for their chargebacks from Credit Card issuers and Banks. But what does our f***ing RBI Officers do in India? (A)Sit on their asses, (B)get influenced by VISA and MasterCard to put them on RBI Working Groups (C) harass any poor consumer who complains to RBI. You guessed it A+B+C

Your Credit Card Chargeback Rights

We have prepared this information to advise you generally of your credit card chargeback rights under federal and California state law.

If you wish to examine them yourself, the federal laws are found in 15 United States Code §§ 1666, 1666i, and 1640(e) and in 12 Code of Federal Regulations §§ 226.12(c) and 226.13. The California laws begin at California Civil Code § 1747

Under these laws, you may have a right to the issuance of a credit by the bank or other financial institution that issued your Mastercard or Visa card or, if you used an American Express card, by American Express itself. On the back of your monthly statement is the address to which all inquiries and written requests for chargebacks should be directed.

When you apply for a Visa card or Mastercard, it is usually issued by a bank. Your dealings are with the bank, called the "issuing bank" and not Visa or Mastercard. In order to issue such credit cards, a bank must agree to follow Visa or Mastercard regulations, but these regulations cannot take away any of your rights under federal and state laws.

A merchant who takes your credit card prints a receipt and deposits it with his "merchant bank". Under the standard agreement, the merchant maintains a reserve account in the merchant bank to cover chargebacks by dissatisfied cardholders. The merchant bank pays the merchant and sends the receipt to your issuing bank. Your issuing bank then pays the merchant bank and sends you a "statement". There are two categories recognized by federal or state law under which you can resist payment: "billing errors" and "claims and defenses".



BILLING ERRORS

There are several types of "billing errors"; mainly:

Charges you did not authorize;

Charges for undelivered goods or services;

Charges for goods or services different from what was represented or of the wrong quantity;

Charges for goods that were not timely delivered.


If you believe there was a "billing error", you must, within 60 days following the date of the first statement on which the charge appears (not the date you made the charge; the date of the issuance of the statement appears on the face of the statement), write a letter to your bank setting forth in specific detail your dealings with the merchant (i.e., Did you respond to an ad in a newspaper, receive a telephone call, visit a store? What did the merchant tell you about what you would be receiving? etc.). If you kept a mailer or the ad from the merchant, attach copies to your letter, along with any correspondence between you and the merchant.

If you get your letter to your bank within the 60-day period (some banks extend this to 90 days), you need not meet any other condition. No geographical restrictions apply. You need not make any attempt to resolve the dispute with the merchant, and you can assert a billing error even if you have already paid off the disputed amount. Your bank may ask you to send the merchandise back to the merchant or to the bank itself before it will give you a credit refund. Your bank stands in the shoes of the merchant and will credit your account while it checks to determine whether your claim is valid.



CLAIMS AND DEFENSES

Under federal and state laws, you have up to one year from the date of the statement (far longer than the 60-day limit for asserting "billing errors") to notify your bank in writing of "claims and defenses". However, unlike billing errors, you must meet four additional conditions:


The disputed amount must be over fifty dollars ($50);


You cannot dispute the charge under "claims and defenses" if you notify your bank after you have already paid off the disputed amount. However, if you have paid off only a portion of the disputed charge, you can still resist payment on the unpaid balance of the disputed charge. For example, if the charge was for $300 and your last payment to your bank was only $50, you can still seek a chargeback for the remaining $250 under the "claims and defenses" category;


The transaction cannot be with a merchant more than 100 miles from your home or outside the state of your residence. For example, let's assume that you travelled to New Orleans from California for a vacation. While there, you purchased an expensive vase using your credit card. The merchant hands you a box which you open upon returning home. Inside the box is confetti, but no vase. If you notify your bank within 60 days, you can qualify for the issuance of a credit from your bank under the "billing errors" basis for chargebacks. However, if you wait beyond the 60-day period to assert a claim and defense against your bank, you would be ineligible for the issuance of a credit. In California and in some other states, transactions on the telephone are considered to take place at your home and not at the merchant's place of business, no matter who placed the call. Similarly, in those states, if you fill out an order form sent to the merchant, and agree to purchase by writing down your credit card account number, the transaction also occurs in your home (federal law states that where the agreement is reached depends on state law);


Before notifying your bank, you must make a good faith effort to obtain a refund or credit from the merchant. A letter, documented telephone call, or signing a notice of rescission (cancellation) would suffice.


Most cancellations are made because of merchant misrepresentations, but in some transactions, the most common being home solicitation consumer sales, the merchant must give you a written notice which you sign, date and return to the merchant within three (3) business days to cancel the transaction. In California and in some other states, sales by telephone are considered home solicitation sales. If the merchant does not give you the necessary notice, you may have even a longer time to cancel. Before notifying the bank, you may wish to send to the merchant a rescission or cancellation notice.

We do not know whether you have a valid "claim and defense". Unfortunately, notwithstanding efforts by this and other law enforcement agencies, and particularly Visa, to ensure that card-issuing banks honor the federal and state rights of cardholders, your letter asserting a "claims and defenses" basis for a chargeback may be handled by a customer service representative who is poorly trained. In some instances, we have heard of denials of valid claims and defenses which otherwise meet all of the requirements on grounds that the letter was not received within 60 days, the merchant has filed for bankruptcy, or the merchant bank refuses to pay back the card-issuing bank because the time limits regulating dealings between the banks under Visa or Mastercard regulations have expired. None of these are proper or legal grounds for denying a valid claim for a chargeback under the "claims and defenses" category. In short, your letter may fall into the hands of an inexperienced customer service employee of the bank who has not been properly trained about "claims and defenses" and will erroneously deny your claim. To give yourself some protection against this happening, you may wish to attach a copy of this letter to the letter you prepare for your bank.

Finally, even if you cannot satisfy either the "billing errors" or "claims and defenses" requirements for chargebacks, you may still wish to write your bank. Some banks will process these requests upon voluntary compliance arrangements they have reached with other banks. In the event your bank denies your request, and you believe that you have satisfied all of the required conditions, please feel free to write to our Public Inquiry Unit at the above address.

CIBIL: "Round up the usual suspects"

So CIBIL and the other CIB's can "circulate" credit information without the consent of borrowers? Well this blogger will certainly have to approach the superior judiciary once his Hacking Complaint is disposed off.
The recently-passed Credit Information Companies (Regulation) Bill, has formalised the credit data-sharing efforts already under way with the establishment of CIBIL in May last year. Banks and finance companies hold equity in CIBIL. This effort may change the face of credit risk management finds Minna Kumar of Sify Finance.

The recently-passed Credit Information Companies (Regulation) Bill has legitimised the credit data-sharing efforts already under way with the establishment of Credit Information Bureau (India) Ltd (CIBIL).

Since the inception of CIBIL in May 2004, banks have been awaiting a new law that would allow them to share credit information of a borrower without seeking his consent. So far, banks had to obtain permission from borrowers before sharing information with the bureau. The premise of setting up CIBIL was to minimise non-performing assets that were plaguing the banking industry for the past decade.

CIBIL, works on the principle of reciprocity. Only those members who provide data will have access to information from CIBIL.

The Bill now makes it mandatory for every credit-providing institution in the country to report to at least one credit information company such as CIBIL about personal information on borrowers and their transactions including, but not limited to the amount, repayment history and default status.

The Bill covers a wide array of secured and unsecured credit schemes including personal, home and vehicle loans, leasing and hire purchases, credit cards, bank guarantees and letters of credit.

The ownership of CIBIL was till recently broad-based. Its equity was held by State Bank of India, Housing Development Finance Corporation Limited, Dun & Bradstreet Information Services India Private Limited and Trans Union International Inc. The shareholding pattern was in the proportion of 40:40:10:10 respectively. SBI and HDFC have now divested 23.75 per cent stake each. Nine new investors including ICICI Bank, Punjab National Bank, HSBC, Citibank and Sundaram Finance have stepped in.

This follows Reserve Bank of India's statement in the annual Monetary and Credit Policy 2004-2005 that credit bureaus should have a sufficiently diversified ownership. RBI wants the ownership to be shared among lenders as the bureau will collect and disseminate sensitive credit information pertaining to an individual or a business. This also brings in more direct participation from financial institutions.

Under the new shareholding structure, ICICI Bank would hold 10 per cent stake with a position on the board of directors. PNB, Bank of India, Central Bank of India, Union Bank of India, Bank of Baroda, Citibank and HSBC would hold 5 per cent stake each and Sundaram Finance would have 2.5 per cent stake. SBI and HDFC will now hold only 16.5 per cent each.

CIBIL has two streams - the consumer bureau, comprising information of individual borrowers in respect of credit cards, home loans and personal loans. It also has a commercial bureau where banks share information of corporate clients in the near future.

The credit report from CIBIL would indicate, how much the individual has borrowed and what his/her repayment history has been. This is expected to mitigate credit risks, enable speedier and more objective credit decisions by banks.

The concept can be very effective in controlling non-performing assets of banks. The law covering the operation of credit bureaus like CIBIL will change the face of risk management in the country. However, some questions remain unanswered. For example, what is the legal responsibility of credit bureaus, lenders and the government in informing and educating the consumers about how their personal information is used and what rights they have?

With a series of mishaps reported from the US, particularly the theft of information from the Bank of America in recent months brings on a whole new shade to this process. It appears to be the responsibility of lawmakers to ensure the safety of information.

The Usual Suspects:

    Santhanakrishnan(Chairman)
    S Santhanakrishnan is the Executive Chairman of CIBIL. Mr. Santhanakrishnan joined CIBIL in December 2004. He is the Chief Executive Officer of the Company. Mr. Santhanakrishnan has over 36 years of banking experience with State Bank of India (SBI) where he retired as Dy. Managing Director and Corporate Development Officer (DMD & CDO).
    Tel: +91-22-56384680 Fax: +91-22-22840571 Email: sskrishnan@cibil.com



    Arun Thukral (Chief Operating Officer)
    Arun Thukral is the Chief Operating Officer of CIBIL. He joined CIBIL in March, 2005. At CIBIL he is responsible for the operations of the Company.
    Mr. Thukral is a post graduate from the University of Delhi and has a diploma in Sales and Marketing from the Faculty of Management Studies, Delhi University. He has over 27 years of experience and has worked with Hindustan Lever Ltd., Blow Plast Ltd., UB Group and his last assignment was with Dun & Bradstreet as Regional Director.
    Tel: +91-22-56384675 Fax: +91-22-22840571 Email: arun@cibil.com



    Sudesh Puthran (Senior Vice President - Information Technology)
    Sudesh Puthran is the Senior Vice President - Information Technology of CIBIL and leads the Technology Team for implementation of state of the art Information Technology solutions for CIBIL. His primary role is to setup the Data Centre and implement IT solutions and operations for CIBIL.
    Mr. Puthran has more than a decade of experience in Information Technology. His last assignment was as Chief Technology Officer at CRISIL, India where he had built fully automated end-to-end workflow solutions for various business processes.
    Mr. Puthran also teaches in some of the management schools in Mumbai University in the area of Information Technology.
    Tel: +91-22-56384642 Fax: +91-22-56384666 Email: sputhran@cibil.com



    P R Viswanathan (Vice President - Marketing)
    P R Viswanathan is the Vice President - Marketing of CIBIL and is responsible for customer interface.
    Before joining CIBIL, P R Viswanathan was working with BNP Paribas as General Manager, Chennai and was later posted in February 2001 as Head - Financial Institutions Group at Mumbai.
    Prior to BNP Paribas, he was at State Bank of India (SBI). He joined SBI as Probationary Officer in 1974 and worked on various assignments till 1998 - primarily in the areas of credit and foreign exchange. He was Assistant General Manager when he retired voluntarily in September 1998.
    Tel: +91-22-56384660 Fax: +91-22-56384666 Email: prv@cibil.com



    Haren Parekh (Vice President - Finance)
    Haren Parekh is the Vice President - Finance of CIBIL and is responsible for the overall Finance, Accounting and Administration of the Company. He is also in charge of the HR and Secretarial functions of the Company. He joined CIBIL in May 2002.
    Before joining CIBIL, Haren Parekh was working with Hindustan Oil Exploration Company Ltd (HOEC) as Deputy General Manager and has more than 18 years post qualifications experience looking after Treasury operations of HOEC and also various business development activities of the Company. He was part of the Management Committee of the Company. Mr. Parekh was also a director in HOEC Bardahl India Ltd., which is a subsidiary of HOEC.
    Earlier he practised as a Chartered Accountant.
    Tel: +91-22-56384646 Fax: +91-22-56384666 Email: haren@cibil.com


Mr.Haren Parekh is my all time favourite contact person at CIBIL. I wish that I could post the rejoinders that CIBIL has made to my Complaint on this BLOG -- too bad that I can't since then I could be sued-- the rejoinders are well drafted, factual and professional. Quite unlike those Standard Chartered Bank clowns :-)