Forgery in the card payment industry refers to transactions carried out using card details without the cardholder's knowledge, or purchases made with counterfeit or stolen credit cards. It is impossible for merchants to reduce their fraud and chargeback risk to zero. However, the goal should be to bring the risk down to reasonable levels.
E-commerce transactions, where the physical presentation of the card is not possible, are more exposed to card fraud. Goods and services can be bought if the "Card Number", the "Card Expiry Date" and the "Security Code" used in such transactions are learned or captured in various ways, which makes this a usage pattern open to fraud and abuse. For this reason, under the rules of the international card payment schemes, the merchant is held responsible for delivering the ordered goods and services to the genuine cardholder. In addition, if the cardholder files a dispute, the burden of proof and documentation as well as the financial liability are transferred to the merchants.
Within the framework of the chargeback rules, this financial liability covers the following for e-commerce transactions without 3D Secure: if cardholders dispute a transaction on the grounds of "this is not mine", the banks do not pay the transaction amounts to the merchant, or they request the refund of amounts that were already paid.
Forgery, a type of fraud in the payment systems security landscape, describes the use of copied or counterfeit cards, or illegal transactions that are carried out. When cyber criminals or hackers shop or make payments with data they have stolen from systems they entered over the internet, it is considered forgery.
So who is responsible for a fraudulent transaction made with a card without entering a PIN?
Let us state first of all that, in a transaction carried out without a PIN, the responsibility lies with the merchant. If a transaction is carried out without entering a PIN, the signature field appears on the transaction receipt. In this case, the merchant's authorized staff member is obliged to verify the identity and signature. If the merchant carries out the transaction without verifying identity and signature, the dispute filed by the cardholder with the issuer is forwarded by the issuer to the acquirer, and by the acquirer to the merchant. The relevant amount is collected from the merchant. It is refunded by the acquirer to the issuer. The issuer then refunds the relevant amount to the cardholder.
In conclusion, in a transaction carried out without a PIN, the responsibility lies with the merchant. The merchant has an obligation to verify identity and signature.
