Hello, bearana,
It seems that the author of the letter noted above is half right.
Some webmasters who accept VISA on their websites will in fact be
charged a fee of $750 to set up, and $350 per year to maintain, their
merchant accounts through internet billers such as iBill, CCBill and
PayPal.
He's only half right because the only webmasters affected by this
change in policy are those who are classified as "adult content
customers".
I spoke with Matt in the Fraud Department at PayPal (1-888-221-1161),
and asked him if this was just internet rumor, or if there was some
truth to the letter you reference above. Matt confirmed that VISA
issued a memo on October 3rd, detailing the new policy - webmasters of
adult content sites were notified that they had to pay the fees by
November 15th, or they would not be permitted to display the VISA logo
or accept VISA on their websites, either directly or through internet
billing services. He stressed that this policy affects *only* adult
content webmasters, not those who run small online businesses or
accept VISA through internet billers for auctions.
He said that the new policy was put into place to combat fraud
associated with providers of adult content (note: fraud not
necessarily committed just by webmasters, but by customers as well -
teenagers checking out the peep show with Dad's stolen credit card,
and the charge-backs related to said teenagers getting caught when
their parents get the bill and dispute the charges, for example).
Because the memo was only just issued a few days ago, PayPal hasn't
inserted any mention into its policy updates section yet. Matt
assured me that the marketing department at PayPal would be posting
something in the next few days addressing the issue, and re-iterated
that the policy change only affects purveyors of adult content.
To double check, I called Jim at CCBill (1-888-906-0666). Jim was
unavailable, but the secretary at CCBill confirmed that a memo had
been issued last week regarding the policy changes, and that the
changes would only affect adult content customers who wish to accept
VISA on their websites.
Neither phone calls nor e-mail messages to Casey Watson, of VISA's
e-commerce division, have been answered for full confirmation. A
secretary at VISA informed me that she may or may not respond within
the next several days. She too confirmed that the policy had been
adopted for adult content webmasters, but declined to provide further
details, instead referring me to Ms. Watson. In the event that Ms.
Watson does respond to my e-mail inquiry, I will post the response
here when/if it arrives.
Apparently this change in policy has been under discussion for quite
some time. According to a YNOTNEWS article archived by Alexa
Internet's Wayback Machine, MasterCard International implemented a
strict compliance program for adult webmasters only in 2001. Though
somewhat different from the new policy adopted by VISA, MasterCard's
policy was seen as a harbinger of further restrictions to come, and
the possibility of VISA implementing such restrictions was discussed
in the article.
The article notes that such policy changes are made by the board of
governing banks for each card issuer. Restrictive policies are based
on risk assessments made by these governing boards, and are entirely
legal - these are credit grantors, and as such, enjoy the ability to
decide whether or not a customer is credit-worthy based on current
credit law and risk assessment procedures. Apparently, the adult
entertainment industry online is responsible for an inordinate amount
of fraud, and as such is classified as "high risk", and subject to
stricter policies than "low risk" customers:
"YNOT: The online adult industry feels that it is being singled out
by Visa/MC, and there is talk of a lawsuit. Do you agree with the
adult industry's assertions?
Mr. Workman: These CDC and chargeback rates, although not purely
arbitrary, do impose a heavier burden on merchants operating in a
"card not present" environment, like the online world. This is
necessarily the case given current customer dispute protocols and the
current online transaction security and authentication infrastructure.
Beyond that, Visa and MC apparently feel that the adult Internet
industry is - - or, at a minimum, was until the recent past - -
responsible for an inordinately high percentage of credit card fraud.
That being their point of view, they have taken a tougher position
with this industry to correct these perceived abuses and weed out
merchants who abuse the system. The problem is, everyone is impacted
by these stricter compliance standards, and it is extremely difficult,
in the existing e-commerce framework, for even the most diligent of
adult webmasters to meet these standards. Particularly given the fact
that the adult online industry has to overcome problems such as fraud
perpetrated by consumers, sometimes called "friendly fraud" - - a
problem which simply isn't faced by other merchant categories.
But you have to remember that Visa and MC are controlled by the
issuing banks, not the acquiring (merchant) banks. The result of this
governance is that the system is set up to favor the consumer, most
particularly where there's no written signature to serve as a binding
authorization, as is presently the case for online transactions."
YNOT News For The Week Of 4/27/00, through the Internet Archive
http://web.archive.org/web/20010715155551/www.ynotnews.com/042700/page7.html
The full article, actually quite an interesting discussion of
restrictive policies for adult sites, begins here:
YNOT News For The Week Of 4/27/00, through the Internet Archive
VISA & MC Chargeback Policies Under Fire
http://web.archive.org/web/20010804131925/www.ynotnews.com/042700/page1.html
It seems this policy was "foretold".
I hope this information sufficiently answers your question. If I can
be of further assistance, just ask and I'll be happy to help.
--Missy |
