From: Tom Mahoney (listsmerchant911.org)
Date: Thu Feb 26 2009 - 16:22:56 CST

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Am I missing something or are Willard and the rest forgetting an
important part of this 'potential' breach? Given that there is no
track data involved, it would seem that on-line merchants are at the
most risk here because of chargeback rights.

As the Pennsylvania Credit Union Association so aptly put it, "Since
track data was not compromised, we are not suggesting that you block
and transfer these compromised accounts. Chargeback rights should
exist for all Card Not Present transactions simply by the cardholder
asserting a dispute for the unauthorized transactions.

In other words, issuers shouldn't worry about preemptive card
replacement; they can stick it to the on-line merchants. Of course
the issuers will gain a few dollars in chargeback fees along the way
and the e-Commerce merchant will loose their product and shipping and
pay the fine for being another victim of fraud. They are, after all,
the path of least resistance for the issuers.

Tom Mahoney, Founder & Director (and resident cynic)
Over 3800 Merchants united to protect themselves
http://www.merchant911.org

At 11:31 AM -0500 2/26/09, DAIL, WILLARD A typed out:
>
>An important distinction, I think is issuing bank vs. acquiring bank.
>Imagine the Visa interchange as a cloud in the middle of a page. To the
>right are the issuing banks. They carry all of the liability for fraud
>and their customers are the consumer, who uses the credit card. They
>make their money in interest and fees associated with the consumer's use
>of the card.
>
>To the left of the cloud is the acquiring bank. Their customers are
>merchants, who they sign up to accept credit cards. These banks make
>their money from transaction fees levied on the merchant. Sometimes, an
>entity can be both an issuer, an acquirer (or a gateway, service
>provider, or any number of functional designations), but not always.
>

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