Chargeback and fraud terms,
in plain English.

All terms

3-D Secure liability shift

The 3-D Secure liability shift is the card network rule under which, for an online payment successfully authenticated with 3-D Secure, liability for a later fraud chargeback typically moves from the merchant to the card issuer.

Account takeover (ATO)

Account takeover (ATO) is a form of identity fraud in which a criminal gains access to a legitimate customer's account, typically with stolen or guessed credentials, and uses it to make purchases or change account details.

AVS (Address Verification Service)

The Address Verification Service (AVS) is a card authorization check in which the issuer compares the billing street address and postal code entered by the customer with the address it holds for the cardholder and returns a match result.

Card testing

Card testing is a fraud attack in which criminals use a merchant's checkout or card-saving flow, usually with automated scripts, to find out which stolen or generated card details are valid before using or selling them.

CDRN (Cardholder Dispute Resolution Network)

The Cardholder Dispute Resolution Network (CDRN) is a Verifi service through which participating card issuers send pre-dispute cases to merchants, who can stop a chargeback by issuing a refund within a set window.

Chargeback

A chargeback is a reversal of a card payment that the cardholder's issuing bank initiates after the cardholder disputes the charge, debiting the disputed amount (and usually a fee) from the merchant.

Chargeback fee

The fee a processor or acquirer charges the merchant for each chargeback, usually whether or not the merchant wins.

Chargeback ratio (VAMP, ECM)

Disputes (and, for Visa VAMP, reported fraud) divided by transactions in a month; card networks put merchants above set thresholds into monitoring programs.

Chargeback reason code

The code a card network assigns to a dispute that states why the cardholder disputed it and sets which evidence can answer it.

Chargeback vs dispute vs retrieval request vs inquiry

A dispute is any cardholder challenge to a payment; a chargeback is the formal reversal that debits the merchant; a retrieval request or inquiry is an earlier request for information that may or may not escalate into a chargeback.

CVV (card verification value)

The CVV (card verification value, also CVC, CVV2 or CID) is the 3 or 4-digit security code printed on a payment card, which the issuer checks during authorization to indicate the person paying has the physical card or its full details.

Early fraud warning (TC40 / SAFE)

An early fraud warning is a notice, derived from issuer fraud reports such as Visa TC40 and Mastercard SAFE, that a card payment has been reported as fraudulent, often before any chargeback is filed.

Ethoca Alerts

Ethoca Alerts is a Mastercard service that shares confirmed-fraud and customer-dispute data from card issuers with merchants in near real time, so the merchant can stop fulfillment or refund before a chargeback is filed.

First-party fraud

Another name for friendly fraud: a chargeback filed by the person who made, or allowed, the purchase.

Friendly fraud

A chargeback filed by the real cardholder for a purchase they made or authorized, often by mistake, confusion or to get a refund without returning goods.

Merchant descriptor

A merchant descriptor (statement or billing descriptor) is the text that identifies a business on a cardholder's bank or card statement for each charge.

Pre-arbitration and arbitration

Pre-arbitration is the stage after representment where the issuer or acquirer challenges the first decision once more; arbitration is the final stage where the card network itself rules on liability, usually with a filing fee charged to the loser.

Rapid Dispute Resolution (Visa RDR)

Rapid Dispute Resolution (RDR) is a Visa pre-dispute service operated by Verifi that automatically resolves a cardholder's dispute with a refund, based on rules the merchant sets in advance, before it becomes a chargeback.

Refund abuse

Obtaining refunds the merchant does not owe, for example by falsely claiming non-delivery, returning a different item or abusing generous return policies.

Representment

Representment is the merchant's formal response to a chargeback, in which it submits evidence through its acquirer or processor asking the issuing bank to reverse the chargeback.

Triangulation fraud

Triangulation fraud is a scheme in which a fraudster sells goods through a fake storefront or marketplace listing, collects payment from a real buyer, and fulfills the order from a legitimate merchant using a stolen card, leaving that merchant with the chargeback.

Visa Acquirer Monitoring Program (VAMP)

Visa's monitoring program since June 2025: fraud reports plus disputes divided by settled card-not-present transactions, with an Excessive level for merchants above set thresholds.

Visa Compelling Evidence 3.0 (CE 3.0)

Visa Compelling Evidence 3.0 is a Visa dispute rule, effective for disputes submitted on or after 15 April 2023, that shifts liability for a card-absent fraud dispute (reason code 10.4) back to the issuer when the merchant shows two qualifying prior undisputed transactions from the same cardholder.

Wardrobing

Wardrobing is a form of return abuse in which a customer buys an item, uses it (for example, wears clothing to an event), and then returns it as if unused for a refund.