CITGO Caps Coverage of Fraud Chargebacks at Pump
CITGO Caps Coverage of Fraud Chargebacks at Pump
CITGO Petroleum Corp. is limiting its chargeback coverage for payment card
fraud at the pump even before the big deadline for outdoor chip card acceptance
kicks in next year.
By Oct. 1, 2020, the large payment card networks will shift certain fraud
liability to gas stations that fail to accept chip cards at the gas island. The
deadline for avoiding fraud liability by accepting chip cards indoors was Oct.
1, 2015.
Many of the major brands indemnified branded stations against payment card
fraud until hardware and software for chip card acceptance was widely available
indoors. The payment card networks postponed the liability shift at the pump by
three years, and the majors generally have seen the delay as sufficient.
However, the prevalence of card fraud forced the card networks and, now, CITGO
to cut their losses to penalize high-risk gas stations that exceed certain
fraud thresholds ahead of that 2020 deadline for island card readers.
In an announcement of its 2019 Island Card Reader Fraud Program, CITGO has told
marketers that locations exceeding the chargeback limits outlined by the card
brands will be liable for all island card reader (ICR) chargebacks.
Effective Jan. 1, CITGO placed a cap on how much ICR fraud it will cover
unconditionally. The major said it will cover up to $500 in chargebacks in
full. However, when chargebacks exceed $500, it will provide full coverage only
if the station proves it is taking certain steps to deter fraud.
With excessive chargebacks, CITGO stations must:
--Use CITGO security seals properly;
--Install customized locks on dispensers;
--Log and perform pump inspections, at minimum on a daily basis (inspections at
shift change are recommended); and
--Check for skimmers or other foreign devices and notify local authorities and
CITGO of any "abnormal" findings.
In its 2018 ICR Fraud Program, CITGO required ZIP code verification, and that
procedure remains mandatory except in New Jersey where it is prohibited, the
major said. CITGO stations also must have PCI-compliant software (compliant
with Payment Card Industry standards).
But as CITGO spelled out last year, it refuses to absorb fraud losses if: a
station employee is involved; the location overrides certain parameters; the
station is aware of the fraud but fails to act; the issuing bank determines the
site is the "point of compromise;" or the location exceeds a card brand's
excessive chargeback threshold.
--Donna Harris, dharris@opisnet.com
fraud at the pump even before the big deadline for outdoor chip card acceptance
kicks in next year.
By Oct. 1, 2020, the large payment card networks will shift certain fraud
liability to gas stations that fail to accept chip cards at the gas island. The
deadline for avoiding fraud liability by accepting chip cards indoors was Oct.
1, 2015.
Many of the major brands indemnified branded stations against payment card
fraud until hardware and software for chip card acceptance was widely available
indoors. The payment card networks postponed the liability shift at the pump by
three years, and the majors generally have seen the delay as sufficient.
However, the prevalence of card fraud forced the card networks and, now, CITGO
to cut their losses to penalize high-risk gas stations that exceed certain
fraud thresholds ahead of that 2020 deadline for island card readers.
In an announcement of its 2019 Island Card Reader Fraud Program, CITGO has told
marketers that locations exceeding the chargeback limits outlined by the card
brands will be liable for all island card reader (ICR) chargebacks.
Effective Jan. 1, CITGO placed a cap on how much ICR fraud it will cover
unconditionally. The major said it will cover up to $500 in chargebacks in
full. However, when chargebacks exceed $500, it will provide full coverage only
if the station proves it is taking certain steps to deter fraud.
With excessive chargebacks, CITGO stations must:
--Use CITGO security seals properly;
--Install customized locks on dispensers;
--Log and perform pump inspections, at minimum on a daily basis (inspections at
shift change are recommended); and
--Check for skimmers or other foreign devices and notify local authorities and
CITGO of any "abnormal" findings.
In its 2018 ICR Fraud Program, CITGO required ZIP code verification, and that
procedure remains mandatory except in New Jersey where it is prohibited, the
major said. CITGO stations also must have PCI-compliant software (compliant
with Payment Card Industry standards).
But as CITGO spelled out last year, it refuses to absorb fraud losses if: a
station employee is involved; the location overrides certain parameters; the
station is aware of the fraud but fails to act; the issuing bank determines the
site is the "point of compromise;" or the location exceeds a card brand's
excessive chargeback threshold.
--Donna Harris, dharris@opisnet.com
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