What are fraud and dispute monitoring programs?

• A. They help merchants resolve disputes without penalties.
• B. Programs that ensure disputes and fraud are kept at acceptable levels. If these exceed the thresholds, the network places the business into a monitoring program. Once the business enters the program, monthly fines and additional fees will be collected until dispute or fraud levels are reduced.
• C. They automatically disqualify merchants whenever thresholds are exceeded.
• D. They are optional programs with no penalties.

Answer: (B)

Fraud and dispute monitoring programs are risk-management tools that aim to keep levels of fraudulent activity and customer disputes within acceptable limits for payment networks. When a merchant’s fraud or dispute metrics exceed predefined thresholds, the network can place the merchant into a monitoring program. While in this program, penalties such as monthly fines and additional fees may be collected until the fraud and dispute levels improve. The purpose is to incentivize merchants to reduce fraud and disputes and to protect cardholders and the network from rising risk. These programs are not about automatically disqualifying merchants, nor are they optional with no penalties, and they aren’t simply a way to resolve disputes without penalties.