I am a consumer protection attorney who does work advocating for individuals with credit card and debit card disputes.
I’m pretty opposed to this change, even though it’s veiled in terms of fairness. The fact is, the banks and Visa are far too quick to deny disputes.
This reeks of all of the times that an industry foists some type of “protection“ on consumers to address some alleged abuse of the system.
For example, you used to be able to discharge student loans in bankruptcy. Then the industry made up a BS narrative that people were taking out tons of loans, getting their degrees, and then filing for bankruptcy em masse. It was a lie. The number of people who are filing for bankruptcy and getting student loans discharged was infinitesimally small. But that didn’t stop them from lobbying Congress for modifications that prohibit the discharge of student loans in bankruptcy. And, well, you know how the rest goes.
My point is, the alleged abuse is almost certainly a very small, or even, non-issue. But these changes will have dramatic, negative repercussions on a large swath of customers.
> For example, you used to be able to discharge student loans in bankruptcy.
IMO, a non-dischargeable loan should have a 0% interest rate by law. All banks would get is an origination fee, capped by statute to some low amount (say, 1% of the principal).
I'd be in favor of this being applied retroactively, so that all interest paid on non-dischargeable student loans in the past was applied to the principal and any overages refunded to the borrower (perhaps over a period of time or against taxes owed or similar).
I'd prefer both of these to be done instead of a one-time "student loan forgiveness" program.
I’m totally opposed to predatory student loans, but your point seems kinda light on logic. If the number of student loans being discharged was “infinitesimally small” and we can assume prohibiting bankruptcy drove the number of delinquent loans down even lower, why are student loan repayments considered a huge issue?
Since it's nearly impossible now to discharge student loans in bankruptcy, lenders have 0 incentive to do any due diligence on borrowers. Quite the opposite, their only incentive is to get students to take out heaps of loans that will keep them in debt servitude for a lifetime. This is why you have cooking schools, where most jobs barely pay more than minimum wage, charging many 10s of thousands of dollars but all students can get loans.
If bankruptcy was a possibility lenders would be much more cautious about tuition rates and potential for a borrower to actually pay it back.
I guess I forgot the human element when thinking about it, that banks will readily pounce on loans with guaranteed repayment and that people will sign up for them.
Under bankruptcy, you don’t necessarily get everything wiped clean and a fresh start. A court will determine how much you can pay and to whom and assets will include a percentage of your future income. On top of that, your ability to get credit will be severely impacted for at least seven years meaning good luck getting a car loan at non-usurious rates, credit cards, etc. You may even find that getting something like a simple checking account becomes rather difficult (I had to sell my first house in a short sale in the 90s and even though the consequences were less dramatic than bankruptcy,¹ it still impacted my financial prospects for a long time afterwards).
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1. I went to a credit counseling agency in the midst of that financial distress and the counselors all insisted that I didn’t want to go through bankruptcy although in retrospect, that was exactly what I should have done. What I didn’t know then was that the credit counseling agencies are all run by the credit card companies.
In the US context there are already provisions for this, abusive debtors can be forced from a schedule 7 to a schedule 13 bankruptcy, and in any case if the creditor protections aren't sufficient there are ways to bolster those protections without just allowing the creditors to have debt slaves.
For instance, you can disallow discharging debts for a period of years after the education ends. The status quo is pretty corrupt.
Declaring bankruptcy immediately after graduation was last legal in 1976, when private school tuition could be paid for with 20 hours/week of minimum wage labor. Even for an amoral profit optimizer, explicitly planning to have zero assets and maximum debt at graduation and immediately declaring bankruptcy was not yet a particularly compelling idea.
I don't think it'd really be a thing today either, but the circumstances are clearly very different.
Private school tuition at about $1600/year? Public university tuition was well under that, but my recollection is that private university tuition was about double that.
Despite this being true, it's probably bad in the long term to build a society where being honest and trying to do the right thing is a losing strategy.
I'm guessing that possibility kept a lid on predatory lending, especially by for-profit colleges. For instance, if you know that your students have an option to discharge, then you'll make sure not to charge them enough that they see that discharge and stain of bankruptcy as better than just paying off the loan. It was a (dramatic, drastic, and undesired) weapon that consumers had in their back pocket.
Get rid of the safety valve, and then see what happens as the colleges realize there's no balance of power... you get the current situation.
This is also a salient point. When these lenders know that they can lend out money, it will be back completely by the federal government, and it can’t be discharged in bankruptcy, they have very little incentive not to lend. That completely destroys the standard economics and considerations behind any type of credit
> When these lenders know that they can lend out money, it will be back completely by the federal government,
Even with nondischargeability for student loans in general, only loans participating in specific federal programs (which have limits, both as to institutions and amounts) were eligible for federal guarantees, and the part of those programs that lenders other than the federal government itself participated in was ended in 2010.
You can't just file for bankruptcy if you are making money. I guess the mass numbers of people filing where not making any money. That is the real issue. Why weren't they making enough to at least get forced into a repayment plan?
By eliminating the ability to discharge bankruptcy, they enabled lenders to lend far more money to the point of turning students into modern day indentured servants. Once you sell all these moneylenders their slaves, it causes economic problems when you try and free them.
Well I didn’t have 25 pages to give you the full thesis. I mean, there’s a lot wrong with student loans, including predatory lending in the first place. But one subset of story you hear about are people who are followed for their entire lives by student loans because things never worked out for them in terms of income generation on their degrees. Those stories can be mitigated with proper bankruptcy protections.
There’s 1000 other things we need to fix with the system too.
The primary problem with student loans is needing them in the first place.
We as a society (and taxpayers) should not help people pay rip-offs, whether they be those perpetrated by colleges or those perpetrated by insurance companies. We should be stopping the rip-offs themselves.
> We as a society (and taxpayers) should not help people pay rip-offs
The solution here appears to be that the government should not be involved with subsidising or backing student loans at all. Then you have a free choice - invest in student loans if you want to "help people pay rip offs" or don't if you don't.
As a country, particularly one with an advanced economy, we need to subsidize education in order to remain competitive. Generally the left would have preferred to just directly subsidize schools by giving them money, but instead we have the compromise plan of student loans. And boy is our system compromised!
We have the compromise plan of transferring future cash flow of students and taxpayers in the case of defaulted borrowers into the pockets of college administrators.
All under the guise of “helping” students while keeping taxes low.
There's more. Colleges that perpetrate these rip-offs should lose their tax-exempt status. Otherwise, we all continue to subsidize them.
A lot of these schools wallow in obscene endowments and own a shitload of prime real estate, while paying no taxes and bringing in loads of money on sports. It's time to bring them to heel.
How failure to generate income on their degrees is a lender's problem?
Clearly,there is an issue with inflated costs of getting a degree and finding a job with a low-demand degree, but why try solving it at the lender's expense?
And how is it related to the friendly fraud issue?
I never said it was the lenders fault. I’m just saying our bankruptcy system allows people to discharge debt. Whether you took on the debt responsibly or irresponsibly, we have a bankruptcy system that allows you to discharge that debt and get a clean slate, generally speaking. I’m not here to argue the merits of our existing bankruptcy system.
Your comment could apply to any kind of debt that people get discharged in bankruptcy. Credit card debt, judgments from courts. The person or organization on the other side of the dead might not have done anything wrong (indeed, if we are talking about a judgment from a court, the person that you owe that money to might’ve actually been harmed by you). However, these debts are subject to the bankruptcy code. But not student loan lenders. (I know this is an oversimplification, see my * on another comment)
The relationship to the friendly fraud issue is pretty straightforward. Simply put, I believe Visa is over stating the costs and risk of friendly fraud the same way that the industry did with regards to discharge of student loans. We see this in other contexts as well. Government actors are often trying to strip fundamental rights to privacy and from unreasonable searches in the name of protecting us from terrorism or child pornography predators. I’m not denying that those risks exist, the same way that the risk for friendly fraud exists. I’m simply saying that the proponent of the “corrective measure“ is probably over stating the threat.
Why should the lender be completely insulated against a borrower's inability to repay? Why should a lender be able to lend for education without any diligence on borrower's ability to repay, but not in other domains?
All that is being proposed is the cessation of the government providing services to creditors where they chase down some disabled person with student debts from 30 years ago and shake them down for money and garnish their wages. It's simply not nessecary and not in the interests of the government's stakeholders to provide such services to creditors.
If this means that schemes where a debtor lends out so much money that they will go broke unless they end up milking people for decades aren't viable anymore, so be it. If a debtor goes broke due to such regulatory changes, they should not be compensated, as it's not reasonable to expect zero risk given how unpopular the debt bondage is. Normally one wants to only make such changes with compensation, in order to give lenders confidence their contracts will be enforced or at least they will be compensated, but the status quo around student debt is so extreme and exceptional I don't think that's necessary here. Outside of student debt, prison labor is the only other form of legal slavery I can name in the United States.
> How failure to generate income on their degrees is a lender's problem? Clearly,there is an issue with inflated costs of getting a degree and finding a job with a low-demand degree, but why try solving it at the lender's expense?
Yeah, I've never really understood this logic either. If someone lends money from me to, let's say go buy a tow truck, and then is not able to repay the loan because there are too many other folks with tow trucks (or for whatever other reason), why should that be my problem? I gave money with the expectation that it would be paid back. That is by definition what lending is, yet student loans are somehow touted as an exception where repayment shouldn't be seen as compulsory.
The logic isn't that student loans are a special thing that shouldn't have to be paid back. The logic is that under normal circumstances the lenders has an incentive to evaluate the probability that the borrower will actually pay the loan back. They might raise the interest rate on higher risk loans or just refuse to lend. But with federally guaranteed loans that can't possibly be discharged, the lender's new incentive is to saddle all possible borrowers with as much debt as they can, regardless of their ability to pay.
The idea is that the lenders would stop lending to students who are likely to fail or who are studying something they won't be able to get a job in. The new reality would be: either study something with serious job opportunities, or pay out of pocket.
I think everyone agrees repaying money you borrow is the moral and right thing to do, but pragmatically bankruptcy acts as a governor on lending. In every other industry (including someone lending money for you to buy a tow truck) they need to weigh the possibility that you will never pay them back.
However, what does your intuition say when you try to think systemically? There is some percentage of people who get screwed by loans due to unforseen circumstances and no fault of their own. Student loans are universal enough that the stats make this number of people non-insignificant. If it's nobody's fault, who should shoulder how much of the burden?
So, say we make up a number and consider that we know around 10,000 people per year get student loans and eventually end up below the poverty line due to severely bad luck. The situation isn't their fault; it's also not the bank's fault. So what do you do as a policy maker?
What if you knew that, by forgiving student loans, 8,000 of those individuals would bounce back and become productive members of society, while only 1,000 would otherwise? What are negative and positive impacts on forcing banks to shoulder the burden of these defaulting loans? What about forcing individuals to shoulder the burden?
I mean, it sounds like you generally don’t agree with the bankruptcy system in our country then. And that’s a totally valid position. But I think that concern is somewhat irrelevant to the issue of student loans being treated different than other debt. I suppose, if you think that student loans being non-dischargeable is the first step in the right direction, then maybe it’s somewhat relevant, and you hope the rest of debt eventually becomes more difficult to discharge.
For what it’s worth, I would probably agree with that stance. You’re talking to a guy who had more than $100,000 worth of student loans and lived really cheap to pay them off as soon as possible. I’m not going to deny that a part of me cringes when they talk about student loan relief, because I’ll feel like a donkey for paying mine off.
Part of what you charge when you lend someone money is a risk premium, because there's a chance you won't be paid back.
If you lend money to tow-truck operators then it is absolutely possible for them to go bankrupt and for you to fail to recover the entire value of the loan. If you don't like that risk you instead can lend to safer borrowers, the ultimate being the US Government itself - and the quid pro quo is that you can't charge as much for those loans.
The most likely outcome in the tow truck case is that they repossess the tow truck and sell it at auction, only losing a small fraction of the money they loaned you. If someone can't afford a truck they borrowed, you still have a truck.
You can't take back someone's education, which is what makes this type of loan intrinsically riskier. Because you can never get rid of student loans, though, they don't have to do any risk analysis or say "no" to any students. They say "sure", no matter what the data says on the ability to repay for the type of degree that you're applying for. Since nobody is denied funding to go to college, colleges have no economic incentive to price degree programs by expected income. The result is that college becomes more expensive and less accessible to everyone.
Yeah. The dirty/ugly truth is that, economically, the real answer to this problem is not very pretty. Loans would be given out to people with demonstrated academic success, and with a pathway to a job with a proper income to support repayment. You would probably have parents cosigning for loans.
The practical affect would likely make college much more difficult to access for minorities and other individuals low on the socioeconomic status spectrum. It would likely have a net effect of slowing upward mobility and create a college aristocracy.
It really depends on whether the degree is actually relevant to their employability.
If one has a degree in winemaking or philosophy, does rescinding their degree have a significant impact on their employability? If not, then they could just tell the bank to rescind it while still getting the education.
> I’m pretty opposed to this change, even though it’s veiled in terms of fairness. The fact is, the banks and Visa are far too quick to deny disputes.
It sure doesn't look that way from my end.
I maintain the payment processing stuff for a small seller of digital goods and services. The services need to regular contact our servers in order to perform their service, and in that contact they identify which customer is using them.
If a customer cancels and asks for a refund we always give the refund. If they are more than around 20% into the term of their service and our logs show that they have been using it we might prorate the refund, but usually we just give a full refund.
No hoops. They can cancel and request a refund by calling support or do it entirely online without any need to interact with a human.
The only people who might have a good reason for a chargeback are people whose credit cards were stolen and the thieves purchased something from us to check if the card was valid. We almost never see such chargebacks.
Almost all the chargebacks are people who tell their bank that they don't recognize the charge but they have actually been using the service actively for years. Some are on monthly subscriptions and so have had dozens of charges from us before and now suddenly have no idea who we are.
Heck, a fair number of these people even have had their subscriptions stop because their on-file card was no longer valid, came to their account page at our side and updated their payment info to reactivate their subscription, and then the next time it is time for renewal they are calling their bank saying they never heard of us.
I don't think we have ever been able to convince the bank or card companies to deny any of these chargebacks. None of the use or transaction history matters. They just tell us to FAX them a copy of the customer's signed receipt from the original sale.
Not at all. The whole thing was a canard. And it makes total sense. Filing for bankruptcy is no small thing. The narrative was something like “people will just file bankruptcy“ but you don’t “just“ file bankruptcy. You destroy your credit for 5+ years when you file bankruptcy. So good luck to all these grad students getting a mortgage. Heck, there are a lot of jobs out there where filing for bankruptcy will weaken your chance of getting the job or outright exclude you. People don’t halfheartedly file bankruptcy.
And beyond those systemic barriers, believe it or not, most people aren’t looking to just screw over whatever entity On their loans. You think people want to screw over student loan companies because you exist in the current system where predatory behavior occurs, where you can’t discharge your loans in bankruptcy. As such, you are used to seeing stories about peoples lives being ruined by their student loans. That’s why people hate student loan companies. In a world where student loan companies weren’t so predatory and encouraged to be predatory by unfair bankruptcy exemptions, the narrative towards that might be completely different, and more favorable.
*Just to get a head of a comment that might be forthcoming, I am well aware that student loans actually can be discharged in bankruptcy. But they are given favorable treatment (for the creditor), and you have to make an above and beyond showing to have them discharged relative to other forms of debt.
In current environment few people buy houses <5 years after graduation and I have never heard about job checking credit score/bankruptcy data. May be some jobs related to finances? Definitely not tech companies. And in retail/low wage jobs most people have shitty credit so there is no point in checking.
In many jobs, (banking, defense...) a good credit score is a mark of trustworthiness.
And when you think about it, if you're going to hire someone involved in your money stream, wouldn't you want to know if they've ever, say, been indebted to a casino? Had a home repossessed?
Hell, even a walmart cashier might handle 1k or 2k of currency a day.
People <5 years after graduation not buying houses are usually renting, and renting often requires a credit check, so bankruptcy would still adversely affect their housing.
a sitting member of US congress is refusing to pay off her loans, and is trying extremely hard to get loan forgiveness done by the president, and is seemingly(my speculation) not paying off, even the minimum amount, as she (again, my speculation) seems to bank on the loan forgiveness happening. She drives(or was it sold?) a Tesla, but wouldnt make minimum payments.
oh please, she isnt even, as far as I know, marketing this fact heavily. When she does performative art, it is the photo-ops down at the border, simulating arrests while protesting, or talking about how her "abuela" has no way to fix her roof in another country.
Downvote away, but she simply isnt paying the student debt, and that is because she feels that it is a god given right to get it for free(aka have other people pay for it). Thus proving my point, people do not neccesarily pay simply because they are able to.
obviously i am not at all suggesting that she had an ambition to take office to get rid of student debt. But clearly it is unreasonably to say "anyone that could pay off would do it"
When college costs are reasonable, kneecapping your credit for 7 years right as you're entering the workforce is a big headache.
But preventing people from discharging student loans in bankruptcy means that there was no pressure to keep college costs low, because there's no reason to be cautious with giving enough loans to cover exorbitant costs.
Well, that’s a really great point. I’m not trying to hijack this post with analysis about student loans. But you’re totally right. We are increasingly looking to relief from student loans, precisely because they have gotten so out of control. And part of the reason they have gotten so out of control is because they had bankruptcy protection, so they were given to anyone and everyone without fear of bankruptcy. And when you flood a system with money, as we’ve learned in the past 24 months, prices go up. So now people need to take out more loans, which are readily available because they can’t be discharged in bankruptcy, and the glorious cycle continues.
One thing that people need to be aware of, is that Visa does not get to set all of the rules for chargebacks and disputes. You have dispute/chargeback rights that are secured by federal law. They are not as comprehensive as Visa, but in some ways they can be stronger. The problem is there are very few attorneys who practice in this area. I know, because I’m one of them. But some of these protections have Real teeth.
For example, I recently had a client who had his crypto.com account hacked. That account was tied to his checking account. The hackers debited his checking account, by buying bitcoin, and then transfer it out the bitcoin. My client disputed the charges, and the bank denied all of his disputes.
This was all in the context of a well documented breach of a major telecom company. He had all of the substantiation. It was clear that the bitcoin had gone into a very large wallet for purposes of fraud. Despite all of this, he was denied his dispute.
Long story short, we got his $10,000 back, got him another $5000, and the bank pay my fees. That was all based on federal law, not visa dispute rules. So the good news is that these changes do nothing to diminish those lasting rights under the law. But it should put this issue on your radar. If they are starting here, it won’t be long until they start lobbying Congress to soften the protections in law as well
The problem is in most cases by the time you're talking about involving a lawyer, most consumers have given up the fight. A majority of the fraud cases I've had requiring charge backs have been in the 20-50 dollar range, so not nearly enough to justify legal assistance.
By putting the onus on the legal system it allows merchants to commit smaller scale fraud more easily because normal people don't have lawyers on hand and aren't willing to do so for a $30 case of fraud, as justified as it may be.
It really calls for streamlining small claims court filings for smaller losses, but your point stands about larger losses. Probably room for the CFPB and FTC to work together to provide for this in some capacity.
> That was all based on federal law, not visa dispute rules
In my experience, insurance adjusters are completely oblivious to the distinction here—that there are your company's rules, and then there's the rule of law, i.e. something bigger than you or your boss or your boss's boss, etc.
Insurance carriers especially benefit greatly from the misconceptions held by those in their workforce (and who end up seeding public perception with the same errors), even when they're pretty easily shown to contradict the law. It's almost certainly intentional.
Perhaps you could put some useful information in this anecdote by telling us what keywords we would need to give to a bar referral service to get a lawyer with your particular expertise?
The problem is that this area is so small that most people don’t bother with the niche. However I don’t wanna be completely unhelpful, so I would encourage anyone who’s looking to look for someone who has experience with “FCRA” cases.
That’s a really big niche And should turn up lots of attorneys, but there are some similarities between that type of practice and this other type of consumer protection practice. So even if they don’t have direct experience, they should still be comfortable in that realm.
> And why do you think it is fair to make a bank pay for your fees
Because if the bank broke their legal obligations to the customer and the consumer had to use a attorney to recover their money, the attorney deserves to get paid.
Banks are expected to know their customer and to take measures to prevent fraud, rather than watching money go by and shrugging because they made a few nickels.
You're right up to the point where the context is fraud.
the bank is not required to process transactions for an impersonator. the opposite in fact, it's supposed to filter out the fraudster's transaction! even if his password leaked, none of that matters. the transaction is valid only between the bank and the individual, any failure in communication between those two is the bank's problem, it just depends on how loud the scammed consumer is willing to be.
in China today there are people in Henan province that had their money completely stolen from their accounts... by the bank owner! and who's responsible? the central bank of course, and they will all be repaid, and very fast now because they protested very very loudly
Exactly my point: banks should be responsible for doing the job they are paid for, processing transactions, and should not be liable for someone else's lack of judgement.
The fact that it is legal to make banks pay for such things does not mean it is just, moral or ethical.
We have a few hundred years of legal tradition around banking and commercial transactions, that have been carefully balanced in ways to give everyone involved an incentive to prevent fraud and to produce a system in which the amount of fraud is manageable.
Externalizing all the risk out to the individual customers doesn't seem like a preferable system. Banks have done a whole lot of work to make the risks associated with this manageable and even profitable.
Consumers are safer, and also it is more reasonable to trust the payment system to have safe outcomes. As a result it is used more, and banks make more money.
> US banks in average lose 2-4 orders of magnitude more to fraud than banks outside of the US.
You think US banks lose 10000x as much to fraud as banks outside of the US?
Card fraud in Germany is 0.02% of transaction value. Does that mean it's 200% of transaction value here?
Most recent number I have for US is 6.81 cents per $100, or .07%. The regulatory regimes are not too different, between Europe and the US.
Banks are legally incentivized to reduce fraud, but even so US banks have resisted anti-fraud measures because they add friction to transactions. Witness them being slow to deploy chips to credit cards and electing not to deploy chip-and-PIN in the US.
P.S. I would avoid using the word "retarded", even misspelled.
Some anecdata: I used to work for a bank in Eastern Europe and we once lost a grand total of $6K to fraud one year with about ~1M cardholders.
10000x of that would be $60 per customer per year. Some neobanks here in the US lose more.
The point is, all the fraud loses end up being paid for by other customers.
So that guy changed his mind, filed a chargeback for a transaction he actually did authorize, and he and his laywer got paid by all other customers who did nothing wrong. And some folks who could have been happily banked ended up unbanked.
Every indication is that Europe has about half the payment card fraud rate of the US-- mostly explained by lower rates of card-present fraud due to use of chip-and-PIN.
I was surprised to see Eastern Europe have such a low rate of fraud from an issuing perspective, but it's still about half the European average. From the acquiring perspective, Eastern Europe is *ahem* well-represented in payment fraud.
> So that guy changed his mind, filed a chargeback for a transaction he actually did authorize,
That is not the facts or situation that the grandparent poster described.
You are looking at it from the wrong end, averages mask the issue.
Consider this: Romanian state employees generate multiple X less fraud than average Romanians. Bank serving them may lose cents per customer per year and make, say, $50 per year.
A neobank in the US engaged in predatory lending to gig workers may lose $60 per customer per year, but may make $200.
If you compare similar segments and similar business models, the difference can be 2-4 orders of magnitude, depending on segment.
That guy authorized crypto.com to access his bank account, crypto.com got hacked, and bank ended up paying him and his lawyer. What is not correct here?
Who had to foot the bill in the end?
> You are looking at it from the wrong end, averages mask the issue.
Your claim was there was 10,000x more payment fraud in the US than in these countries, due to the different regulatory regime.
Data indicates there's like 3-4x, and a lot of it is more easily explained by greater share of card-not-present transactions and lack of chip-and-pin.
> If you compare similar segments and similar business models, the difference can be 2-4 orders of magnitude, depending on segment.
Oh, so you want to compare the lowest-risk banking sectors in Romania to the highest risk sectors in the US? Sorry-- this does not make sense as a way to compare regulatory regimes.
In the end, banking losses due to fraud... and the systems used to mitigate fraud... cost just several basis points on payment cards in the US and a much smaller share than this on other transactions. This is tiny compared to the overall credit risks and the rest of the cost structure of the transactions.
When it comes to regulation E-- many banks even choose to compete by offering consumers greater protections than reg E requires.
I am merely giving you my experience running banks on both sides of the atlantic.
You can explain however you want. Chip and PIN is a big factor of course but is not the only one. ACH is a hot garbage and is a fraud vector which does not exist anywhere else. Remote account opening is a door wide open for fraud and, again, nowhere else.
Cost of fraud includes FTEs involved in managing fraud, software and infrastructure costs, lost opportunity etc. All those are incomparably higher in the US. I don't really care if you believe me or not, it is just my opinion.
LOL.
I just have to chuckle at trying to bring a moral or ethical argument in favor of banks, given their practices of maximizing of fees they charge to least able to afford them, how they reorder transactions to ensure people go over and they can then extract the most fees.
> I’m a litigator. The system is defined. The law is defined. I just operate within it.
I don't agree with the parent commenter, but I find this view to be widely held among lawyers, and I find it distasteful.
A good way to respond to the question: why should banks be subject to this risk? Because ultimately leaks like the one described shouldn't happen, the people affected by them should be swiftly made whole, and it's not hard to see that banks are in a better position to ensure this happens than the individuals themselves.
Just because from the consumer's perspective the bank "covered" the losses, there's no reason the bank should be understood to be forced to just eat those costs. If a company like crypto.com is ultimately liable, then the bank can more effectively pursue action, whether there was 1 person affected or if N of their customers suffered losses. In the event that there were multiple customers affected, those losses can be consolidated, and the bank can pursue the ultimately liable party to recover the costs that the bank had to (temporarily) foot the bill for. They're frickin' banks.
This is awful.
I've canceled subscriptions so many times only to get billed again, and again, blabla "it's a bug in the billing system" run around.
So now vendors can keep auto billing with dark patterns such as unnavigable automated phone lines, and visa is going to take their side? (because the merchant will have proof of billing history?)
I hope Amex doesn't adopt these rules. I am going to think strongly about canceling my visa cards as a response.
Bitrix24 a SaaS crm/VoIP service was the worst abuser I can recall (kept randomly reappearing a $10.00 months after id asked visa to block them). Free Trial My ass.
I totally agree. Chargebacks are one of the few tools consumers have to fight back against shady companies. I think I've only done one or two chargebacks in my life, but I have threatened them other times when dealing with dishonest companies, which usually leads to them suddenly resolving an "impossible" issue.
If Visa ends up crippling this ability there's no chance I'll use their cards again.
Just yesterday, a guest called and asked to return 3rd night stay because it was more than the 2nd night room rate. Guest booked the room online and had a confirmation email with a daily rate, signed a physical registration card that shows daily rate during check in but insisted that we are overcharging him. He thretened us with a chargeback.
I returned the money because fighting chargeback is a losing battle for us.
They booked 8 rooms as a group, and I basically told him, that they are not welcome here next year and he should explained that to his group why we won't let them stay. Also told him, I am going to call everyone in his group and tell them not to book at our location.
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A couple weeks ago, bank called and wanted to verify the charge. Bank wanted to know if the charge was valid. I told them it was charged through chip reader, and I have a video of the guest using the card. She is like, thats all I need. I m going to deny the chargeback.
A lot of guest book room, and when they forget to cancel they use chargeback.
Look into b4checkin for collecting payments. Should offer more proof of card owner’s consent in the transaction amount than most hotel brand companies’ half baked 30 year old PMS. The franchising company will not care because their cut is a portion of top line revenue, and chargeback loss is all on the hotel.
Why are the room rates so highly variable in the first place? Your guest sounds like a total jerk, no doubt. Hotels have also been quick to adopt the nickel-and-dime-customers-to-death business strategy, which adds up to a pretty big ding for folks paying out of pocket.
From a customer perspective, it feels like a stingy, one-sided relationship with all the hidden fees for what should be a relatively simple arrangement.
Still not defending your idiot customer who couldn't be bothered to read the presumably clear and well-intentioned agreement they signed.
Lots of hotel stays I do have non-uniform rates-- e.g. different weekend and weekday rates, cheaper rate for first day, cheaper rate past a certain length of stay... But basically all confirmations have clearly showed me my total charge and average daily rate-- and it's never really mattered to me that some of the days cost different amounts than other ones.
> Why are the room rates so highly variable in the first place?
A lot of reasons but mostly due to demand and supply. We are mostly busy on the weekends (Fri/Sat). Weekends rates will be higher than weekdays. If the majority of the rooms are booked 6 months in advance, rate will be higher for those days. Not having enough housekeepers to clean the rooms, increase the rate so that we have less rooms to clean.
> Hotels have also been quick to adopt the nickel-and-dime-customers-to-death business strategy
I would say, not really. Look at the hospitality reits. They have lowest returns compare to other reits.
Variable pricing is always because supply and demand are constantly in motion.
I see a sign on the Taco Bell advertising a $4 per hour premium ($21 per hour) for people who are willing to work late night and will stay to close the place up. I see a possibility of restaurants charging more for food at 11pm rather than 1pm. Which already happens at many places via discounts for “lunch specials” available only during noon hours.
Same reason for hotels to charge different prices for different nights.
You can throw in price discrimination / price segmentation and collect different prices from different people for the room night. Similar to how retail businesses give a lower price to people willing to spend their time finding coupons.
I haven't had to do a chargeback, but it's the only reason I have a credit card. Visa just flushed all their value, in my eyes, down the toilet. Reward programs and fancy priority lines don't mean squat if I can't leverage the power of my creditor when fighting fraud or unfair transactions.
On the other hand, my Discover card has been my go to for as long as I've had a card.
> If Visa ends up crippling this ability there's no chance I'll use their cards again.
Curious how this makes other options more competitive. If liberal dispute policies are one of the value props of using a CC, and merchants eat the fees, the value of using a CC declines if dispute resolution is tightened up making it closer to parity of irreversible funds transfers (although there is still the float component not yet solved for in the financial UX of most financial service providers).
I think if you can prove that you tried to cancel and the merchant screwed up you should be fine. Hopefully you have a paper trail of them admitting its a “bug in Billings”.
Aside: One of the best things about AMEX is their customer support around chargebacks and I agree I hope they stay super friendly to this.
I switched back to Amex despite them offering worse rewards than my other card because of this.
Other card: I returned an item, with proof of delivery via UPS tracking. Never got a refund. Opened a dispute. Weeks later, the dispute was resolved in the merchant's favor despite the merchant providing nothing as evidence except the original receipt. I had to call the help line, deal with several uncomprehending service reps until one of them re-opened the dispute, asking me to resubmit the same documents I submitted the first time! Finally the dispute was resolved in my favor a month later.
Amex: I ordered some items from a local store to be delivered and the order was cancelled without my money being refunded. I received an email with a few questions, which I answered. A few weeks later the dispute was resolved in my favor.
I still need to carry another card because some merchants don't accept Amex, but I use the Amex for everything I possibly can. I'm giving up some cash back rewards to do so, and I'm also paying an annual fee, but that's a small price to pay for getting better service when something goes wrong.
Amex Gold is pretty decent for travel rewards (4x for food/groceries) and amex points are ranked pretty well for value by the points guy (https://thepointsguy.com/guide/amex-points-value/) - certainly structured differently than cash back but free travel with a year or two of normal expenses isn't too bad a deal
I never use Amex because they're the only card that has denied me a chargeback. Basically the hotel runs a nice little scam and Amex enables it. They seem to be very shy about accepting chargebacks to hotels.
The scam was that you'd book a cancellable room and the hotel would cancel your booking after they accepted it due to "unavailability of the room" (wtf), then rebook an identical "alternative" room "at the cheapest rate" which happens to be an uncancellable room at $1 less.
Why? Because they are impossible to find. No taxi driver can find them. Maybe don't exist. By the time you find this out you can't cancel the room.
So what you're saying is that the vendors will now strive to make it harder to "prove you tried to cancel", just like they're already striving to make it harder to cancel.
Send an email to legal@company.com or ceo@company.com or any known-good generic email they have with a note saying “route this to legal”if the normal gui or CUstomer Support team doesn’t work. I’ve heard investor relations is always a good address that’s monitored by people that have spare time. You have now officially provided a written notice to company. If it’s a really big charge or something serious, send a certified letter. That means the US government is now testifying to the time and date of them receiving letter.
Share that with Visa and see if that changes their opinion on the chargeback.
Be polite, not emotional. Don’t threaten a lawyer or use any language you’d see on a TV legal show. If you’re in California feel free to cite their violation of this law [1]. Don’t threaten to sue. Don’t threaten a lawyer. Just mention that you have the right and you can’t use the UI as expected. If it’s bad you can say something like “if this isn’t resolved I may avail myself of other options afforded by $LAW”. Don’t specify what, don’t threaten they’ll regret it. Just let them know you are someone who is serious and non emotional.
“Company X,
I have tried to cancel this service but I am unable to due to X. After talking with CS they said it was due to $Bug. I talked with $Person at $Date. Let this serve as a formal notice that I will no longer be paying for service and no longer wish to be charged. I will be instructing Visa to reject further charges after $new_future_date.
> After talking with CS they said it was due to $Bug.
Customer support will be (/is) trained to never say such a thing, then.
Also, you are normalizing the idea that customers can be forced to jump through arbitrary hoops; you've just invented one yourself. I'd much rather have this behavior be illegal (see recent FTC ruling).
Oh I’d prefer it be illegal too. See point about the California law. This is a good thing.
Illegal or not, it happens and my comment was what to do if/when it happens. The parent was someone complaining that they had a “billing bug” that they tried to charge back.
I wish everyone was nicer to consumers and not shareholders, but if you want your money back while you petition for new laws. sometimes you have to jump through hoops.
Meanwhile Amex sided with an Australian airline that cancelled flights due to covid, despite the airline being in the news as in financial strife and going into administration.
This is why I use capital ones service to create a new number for every vendor (similar to privacy.com) then I can just turn off that card once I cancel the service
Privacy dot com. It's the only thing I use for anything that's not a major player (Amazonish). It's saved me a lot of time and hassle. Cancel the account and the card at the same time.
I'd never heard of privacy.com, but it looks fantastic. And the $10/mo Pro plan is effectively free if you push $12k worth of eligible transactions through them per year (they are a little weak on defining "eligible", though).
I'd be a little concerned about them knowing about pretty much all of my purchases, though, and how they handle that data, and what they do with it, so more research required...
Hmm, also it sounds like they charge fees when your funding source is a "real" credit card, and not a bank account. That isn't really useful for me, as I rely on credit card rewards for a bunch of stuff, and I imagine the fees they'd charge would wipe out those benefits. But this could certainly be useful for buying something from a one-off merchant where I'm not sure if I can trust them, and in that case the free plan should be enough.
Yeah, I only use the free plan and I go though a bastion bank account for that, so my exposure is limited. I do miss out on rewards, but in general, I feel the trade off is worth it, especially with one off purchases.
Are you comfortable with the recent change in Privacy.com ?
They are using Patriot Bank out of North Dakota as an intermediary. Previously Privacy.com would directly debit from your checking account. In the new process you are signing up for a credit card with Patriot Bank under the hood. They pass on your checking account info to Patriot Bank and somehow money gets exchanged. I don't fully understand the process and don't trust men-in-the-middle like this.
I wasn't satisfied with the information I got from Privacy.com customer service. Has anyone researched this and confirmed there are no shenanigans in the new process. I used to use Privacy for many years but stopped because of this.
Was this part of the big change they did a few months ago to use credit card numbers that vendors can't see as temporary / prepaid? I'm not sure about what you're describing, but it's been substantially more useful to me since that change.
I actually use a bastion bank account so privacy and patriot never get my real one. I push money to the bastion bank and if they do something funky, my exposure is limited.
Cancellation is not always easy. Any “recurring” charge will helpfully reopen your closed account. I guess it’s better to just use prepaid gift cards for subscriptions.
It cuts both ways. You could make a very strong argument that "friendly fraud" is the single reason that the porn industry is having to turn to crypto. Husbands are frequently caught by their spouses and, while pretending that the charge was fraudulent, commit "friendly fraud" themselves.
I, for one, am very happy to see Visa taking steps against this. We've kvetched for years over how how much power payment processors have in the system and now they're finally doing something about it (themselves, to boot!).
Be aware that "When most people think of fraud, they think of stolen account numbers or identity theft, but first party misuse, which can account for up to 75 percent of all chargebacks[1]" looks like marketing spin.
The reference points to a marketing newswire that also states "More than two in five (42%) of surveyed consumers who have filed disputes did so due to true fraud—e.g., unauthorized purchases made with their payment information."
https://www.globenewswire.com/news-release/2021/12/15/235295...
Chargebacks are used as a kind of punitive measure directed at merchants. The idea here is for merchants to figure out the only way to deal with chargebacks is to not get chargebacks at all.
For now this works because for some reason relatively few cardholders are educated enough on what are and how to use chargebacks.
I personally wouldn't be using credit card if not for the chargebacks. I am still paying off entire balance every month, but I am much happier knowing that any dispute on a transaction with a credit card is going to be so much easier than any other form of payment.
I worked at a company that shrugged off customers' threats to chargeback. It was seen as a way to shift customer support load to the bank!
Chargebacks mostly fell into two categories: those who didn't recognize the business's name or financially unstable customers who charged back because they ran out of money at the end of the month and wanted to get some back (sometimes every month).
I guess it helped it was a low risk industry selling a service that can't be resold as only dumb criminals would use stolen credit card information to pay on an account with their name on it.
Was hoping that they would address one big contributor to friendly fraud, which is that credit card descriptions are so ridiculously inscrutable that a cottage industry of fintech startups has emerged just to translate these ridiculous codes into something a human can understand.
I mean, I think we've all dealt with the "WTF is SQ *SMTHNSMTHN on my credit card statement?" issue. If credit cards just showed actual merchant names it would reduce a lot of these problems. Granted, there are some issues with privacy (e.g. most companies know you don't want to see "Butt Plug Emporium" on your CC statement so instead show "A Plus Billing"), but even then I think that issue is solvable.
Allowing longer description lengths would be a huge improvement! Most chargebacks we see are "didn't recognize transaction", then we explain what the charge was for, and have to go through the chargeback cancellation process (which is a whole ordeal in itself).
On that note... Why can't customers cancel a chargeback as easily as they can create one? The whole system is a UX nightmare for all parties involved.
Longer description lengths wouldn't change the fact that a lot of merchants use names that are unrecognizable because they're a corporate name, not the common name of the business.
Instead of Bob's Bagel Company, it's 1132 Fifth LLC, and only after a bunch of googling do you happen to hit upon a corporate database and discover the LLC is for a restaurant.
Merchants shouldn't even be allowed to set this field. It should be set by their merchant bank, and the bank should require that the name on a reader at a business location match the common name of the business, followed by their address or store number if it's a chain, and zipcode. Ideally the business phone number as well. Or there should be a merchant ID, cross-referenceable against a publicly database maintained by credit card companies.
A merchant ID in a separate "more info" field makes sense. But not to replace the description. The description should not only convey where the purchase was made, but also what product was purchased (ideally in enough detail). Only the merchant knows that information and so it's right that it's set by the merchant.
It would be quite expensive to be honest. The best way to do it would be to leave the short description and add an additional large description, therefore those on legacy mainframes can just continue to work until they've able to conduct a spec update and those on modern systems can add it immediately.
Still will cost money though, particularly those paying EDI/VAN data-rates.
I had this experience recently. Had a $1000 charge for “AE.com.” Go to AE.com and it’s American eagle. I didn’t spend $1,000 at AE.
I was all ready to dispute, but then checked my Apple wallet, and I saw the charge at Allen Edmonds. Yeah Allen Edmonds truncates it’s online orders to “ae.com”
I really get into disputes. It’s an occupational hazard. So I was putting together a whole presentation with a video of AE.com loading, ICANN data, and the whole sink, to send to Amex. But, just as I am about to start the dispute process, I checked a couple more places and solve the mystery.
Someone might be reading this and think “you couldn’t remember where you spent $1000 just a week ago“. But I was genuinely flummoxed. I’m sure some psychologist can explain it, but if you had just asked me where I spent $1000, I probably would have remembered. What threw me was the “ae.com” representation. It wasn’t so much that I forgot where I spend money, but a certainty that I did not spend money at AE.com. But I really should reach out to Alan Edmonds and tell them to fix this.
They don’t even say “ae.com shoes” literally the entire description was “ae.com”
Wow, I don’t remember writing this, but it sure sounds like I did.
I could also see my wife making the purchase. A few weeks later, as I’m reconciling our statements, I see a transaction from American Eagle and ask her about it. She reasonably denies it, and has no reason to even consider that I might actually be talking about her Alan Edmonds purchase. I dispute the transaction online, and probably end up getting a new credit card issued because our old one seems to be compromised.
Never heard of them, had to go look it up. Going to assume you got 3 pairs? I suppose I could see not remembering the $1000 charge for clothing if you had been looking at it like 3 or 4 purchases… IDK, I don’t own fancy shoes so I’m having lots of trouble getting in your head space.
The problem is the abbreviation. Imagine you saw "NEWEGG" on your statement. You'd think "I didn't buy $1000 worth of computer hardware". But that transaction was actually Newton's Egg Farm and Trucking, a contractor that does grocery deliveries, and indeed you did buy $1000 worth of groceries online three weeks ago.
That's the problem here; ambiguous transaction descriptions. Sure, you don't buy clothes, so you aren't confused by an Allen Edmonds purchase being marked as American Eagle on your statement. But this can happen in many, many domains.
And to make it worse, suppose it was “NEWEGG.com”. By my reading, that’s the same as saying they’re the same company that owns that website. It removes any ambiguity, which is usually a good thing.
It was actually two pairs of shoes by the time I paid for tax. But it was one style of shoes in two different sizes, intending to send back the other size. if it was some $10 trinket that I was excited to get from Amazon, I probably would have remembered it immediately. But, shoes. Boring
I hope I don't come off as rude but do you really not remember spending $1000 on shoes? Basically any transaction over $100 stays in my mind for a while and I never get confused when I see my CC statement.
I guess if you're making $1M/year your threshold is different but I feel like larger enough transactions should still register.
I can only assume that all of this is backed by some ridiculously old data storage system that has something like a 15-character limit on these names.
And then you have the problem of aggregators like Square (your example), where they have their own prefix, and then apparently do a pretty bad job of making sure their merchants pick reasonable names. And then there are regular merchants who use their company name, which might be wildly different from the name of the store.
I do wonder how much "friendly fraud" is just someone looking at an inscrutable charge description on their statement, having no idea what it is, and disputing it on those grounds, even when it was a valid charge.
Cardholders are supposed to call the merchant first to confirm what the charge is and request a refund. So charging back anything they're not sure because it's easy is not following the payment network rules. However many businesses have half hour hold times ("We are experiencing higher than normal hold times due to the Coronavirus") and take weeks to respond to email if at all. I don't blame people for reflexively clicking dispute charge.
> Cardholders are supposed to call the merchant first
I think you're missing the point. The entire point is you don't know whom the merchant is when see SQ *SMTHNSMTHN.
I literally had that exact problem myself before. [1] I called every entity that I could possibly imagine calling, including my card issuer itself, to try to figure out whom the merchant was. Nobody could tell me. I therefore disputed a charge. Only after I incurred another instance of the same charge did I figure out what merchant was generating that name. I had to call my issuer and let them know to cancel the dispute.
I had the same experience including the SQ in your example.
Square was able to show me GPS data for where the merchant was, and I figured out it was a good truck that put an extra zero in there for a $200 lunch.
So I agree it should be much more clear and transparent.
The person you're replying to was literally talking about Square though. And it's not just a random exception. Lots of merchants use it.
Moreover phone numbers are not common. And I'm not sure what you call store IDs but the ones I recall frequently have no way to look them up. Instead of phone numbers what you frequently see is a city and state. In fact I just went to double-check one of my cards right now to make sure, and exactly 0 of the 8 transactions on it had phone numbers. (This may differ by card issuer.)
Too be honest this is actually my favourite thing about my Apple Card.
I get notifications for every transaction, notifications before the bill is due, and when you view a transaction it shows you the merchant name, location, a brand photo, Apple Maps link if applicable, and all other transactions you’ve made with that merchant.
Not really unique to Apple Card. My Amex and Chase cards also have options for notifications for all those things.
It is honestly a huge convenience. I never need to go line-by-line through my credit card statement to verify charges, because every time there's a charge, I get a push notification and, as a backup, an email.
There was just fraud on one of my cards a few weeks ago, and I knew immediately because of the push notification. Plus, Chase flagged the 2nd fraudulent charge attempt and sent me another push notification and a text message.
I think in principle, for mail-order and ecommerce, you're supposed to put a phone number in the field. For in-person transactions, you're supposed to put city and state.
The problems:
* Not everyone has it set up correctly, either inadvertently,or as an attempt to disguise questionable transactions.
* Ir's a cramped field at best, so you may end up with UNRDBL ABREVS.
* Some space gets burnt with payment aggregatoer/gacilitator IDs (the "SQ" part of the example.
A lot of this stuff is remarkably underused. There's Level 2/3 data, a very detailed interface to document individual receipt line items-- but it's typically only used for corporate cards. So even if someone bothers to configure their shopping cart to correctly populate it (often ignored, since most carts prioritize "we support 2340 different payment platforms, at a minimal level" over offering all bells and whistles, the consumer still won't see the info that would help say "oh, SQBLABLABLABLA was where I bought the blue widgets."
I believe the person you replied to is pointing out that in many cases it's impossible to actually do what you describe, because it is not possible to discern the actual identity of the business from what appears on the credit card statement.
I can think of multiple times I've seen a credit card charge with an absolutely inscrutable "merchant" field, and the only way I've determined where it came from was to search my email for the charge amount.
There's a tremendous amount of devil in the details of how this is implemented:
> "With this change, if merchants can provide additional data or evidence to show that the disputed charge is valid, then the dispute will be invalid."
I've seen (from the merchant side) unfair chargebacks. No question.
But my fear is that Visa is going to implement this something like YouTube copyright claims, where basically, the merchant just has to respond and that's it.
The last chargeback I issued was for an electronics seller who never credited me for a return. I explained the issue to American Express' automated system. Uploaded receipts (including the seller's return instructions, and delivery confirmation of the returned item), and got an instant refund.
I'd love to know how Visa's changes will affect this type of chargeback. It's wasn't "fraud" in the sense that someone used my credit card without authorization. But it certainly was a merchant that didn't follow up on their end of the deal.
Many commenters in this thread seem to be against this change, but looking at the article they seem... pretty reasonable?
>With this change, if merchants can provide additional data or evidence to show that the disputed charge is valid, then the dispute will be invalid.
>This change will empower merchants to protect themselves against first party misuse by enabling them to submit additional evidence that a purchase was indeed legitimate and authorized by the cardholder in order to stop the dispute claim. Additional examples that can help identify that a purchase is legitimate include a customer using the same payment credential previously at the merchant, login credentials, proof of use of a product and more.
The biggest issue here is that the "proof" allowed essentially means recurring billing scams can run rampant without any recourse. Unfortunately a significant amount of "businesses" online and offline are forms of recurrent billing scams. Chargebacks are the /only/ protection consumers have against this form of scam, other than going to court at their own expense.
This GREATLY weakens consumer protections for basically no upside by enabling bad actor merchants. End of story.
It's even worse than this——"reputable" merchants will start acting even worse.
Here's an experiment you can do right now: go to WSJ.com and buy a subscription (instant). Now try to cancel. No button to do so. So start a Support Chat. Clearly type that you want to cancel. You are directed to call a phone number. So now you have to spend anywhere from 5 - 60 minutes on the phone. I tried to do a charge back on my Amex after I experienced this, and was denied.
This is the Wall Street Journal doing dark patterns and getting away with it. Imagine what will happen if credit card companies make it easier for merchants to do stuff like this.
Yup, someone just posted about TeamViewer's version of this scam a few hours ago:
"30 days before your subscription expires, teamviewer send you a friendly email to remind you to that your subscription expires in 30 days and to be sure to renew before then in order to not lose service.
What that email does not tell you is that unless you cancel your subscription at least 30 days (ie on that very day) before your sub expires they will renew you automatically and demand a full year's subscription under threat of legal proceedings..." - https://news.ycombinator.com/item?id=32164897
All -- it’s a good idea for your card(s) to be “stolen”, maybe once every year or two. And yes, it is definitely “stolen”, and not lost. Reps will definitely ask this. If it is lost (which it isn’t), the “thieves” may be able to continue to charge your card number.
That's like, to me, why can't my bank/credit card block charges from a merchant? (Or make you jump through repeated hoops to do so).
I've heard banks tell me "well, you signed a contract with them, so we need to let the charges go through", or the "for your convenience"...
No, my bank has a fiduciary duty to me. If blocking a charge causes me to get into conflict with the merchant, that's between the merchant and I - my bank shouldn't be taking any "side" (and if they do, it should be mine).
You are giving the businesses and other big actors way too much a benefit of the doubt. These large organizations will outright lie to win disputes.
For example, I am an attorney who practices in the space, and I recently filed a dispute with my credit card. In response to my dispute, which I supported with a sworn affidavit, the retailer responded with a blatant, demonstrable lie. They said I never contacted them. Of course, they messed with the wrong person, and I responded with additional evidence and substantiation. I am confident I will win. But most consumers are not going to be able to execute on a dispute the same way that I did. Most consumers just get screwed by the lie. And that’s under the CURRENT system. So now we’re making it even easier for them to lie and screw over customers. Great
As a merchant I can also say the opposite is true. Just as there are dishonest businesses there are dishonest customers. However I think it is at least harder for a business to maintain dishonesty because 1) chargebacks are easy to do under the current system and 2) something like > 1% chargebacks get you suspended (regardless of legitimacy of chargeback).
I think the system could benefit from tightening and more fair procedures. Simply having a more consumer-oriented system doesn’t solve the problem, and leads to overall higher prices that get built into products.
Buyer biased dispute resolution is a ultimately a good thing for merchants. Without it scummy merchants will gain an advantage, the average trust of the whole industry declines, and customers pull back their spending. Soon bad merchants are the majority. Seller biased dispute resolution would allow the classic scam of taking payment but delaying shipment for weeks to re-emerge.
Not really. Buyer biased dispute resolution simply shift the costs of fraud to the merchant, which then build it into the product costs. The only real winner is the middlemen (credit cards) that make money on increased transaction volumes.
Chargebacks are a nightmare for small businesses. We never win, even when we should. Customers keep the items they ordered, and get their money back. How is this okay?
Visa worded this announcement very carefully to give you the impression it's a reasonable change. It's only reasonable for the predatory merchant operators.
Consider the phrasing "first party" instead of "cardholder", to make it less obvious who they're referring to.
Whether or not you think the change is reasonable, something that Visa and other CC processors need to allow is for a consumer to say "I do not want to allow future charges from this merchant", and then to notify the merchant that they will no longer be able to charge that card. This would at least protect against predatory recurring charges.
The merchant can outright lie. I returned a $2k item to Amazon once. Amazon failed to refund, so I filed a dispute. Amazon replied with a 50-page PDF that at the end claimed they didn’t get the item. I then pointed out that not only did UPS deliver it to them in Nevada, but it was Amazon customer support that gave me the tracking number.
This change by Visa is going to be abused by big merchants who have legal teams draft up bullshit blanket responses to scare consumers and then exit pre-arbitration. Since the cost to arbitrate is $400 minimum, it’s difficult for consumers to go through with it.
It sounds like a great way to create a system that concentrates and abuses power, not unlike a "secret court". If the company claims something like "it's covered in the ToS/EULA" what recourse do consumers have if that statement is not exactly true? If Visa agrees with Walmart about some nebulous wording in legalese, where a judge would read it differently, how can consumers advocate for themselves? Lawsuits are an option only for those with the time and access to pursue remuneration through the legal system so that is not a serious option here.
There’s an ocean between fraudulent chargebacks eg canceling or refunding your delivery food after it was delivered and purchases in predatory mobile games that were made without an adult in the loop.
I bought a ticket for an event in January 2020 for April 2020...as you can guess, the event was delayed. It ended up being delayed for over two years. The merchant refused to refund the charge, and a chargeback was my only recourse. Was that first party fraud? I really don't think so, I bought something that wasn't delivered, seems pretty simple to me.
This likely depends heavily on the terms & conditions of the ticket issuer at the time of purchase.
It's not obvious to me that your credit card processor should be forced into dispute resolution in lieu of small claims courts... but if they are being asked to serve that function, then it's reasonable to request evidence from the merchant before rendering a decision based on your accusation.
You may very well be right: maybe they're ripping you off and maybe the ToS are unenforceable.
What I'm saying: adjucating these situations is the purview of a justice system (ie courts). If you were ripped off, you can always go after the party that caused damages (ticket issuer). If you want a "short cut" to "justice" provided by a credit card processor, well then they get to decide when & how -- and I don't think it's unreasonable for them to collect "evidence" from both parties to make more-informed decisions. And again, if you dislike their rulings you always have small claims court at your disposal.
Your comment is radically naive. You can't literally believe what a business writes in its PR spin. The only thing you can take away from this is that Visa intends to tip the balance towards merchants and away from consumers when it comes to chargebacks. The problem with this is chargebacks just barely work as is.
Punishing honest consumers is not the right way to go about this.
If I understand this correctly it is essentially doing second presentment preemptively. ("Hey, Visa, just in case the client questions authorisation, here you have some additional data to shoot those down immediately without you having to contact me for those details")
Most of these pieces of evidence seem worrisome. If I transact with a vendor and they screw me on the second transaction, why should my using the same payment method count against my chargeback?
“Login credentials” and “proof of use” are obviously vague statements, but hopefully require something very specific. If someone acquires my credit card, sets up an account on a service, and uses that service, it doesn’t make it any less fraudulent.
This includes customers refuting valid purchases such as long-forgotten recurring subscriptions...
You said the quiet part out loud here, VISA.
If their subscription has gone unused so long that they've forgotten about it, it's pretty clear they wouldn't keep paying for it if they knew. There's certainly no intention to defraud here on the part of the customer, if they've forgotten about it - arguably, if the merchant should reasonably know that the customer has forgotten about the subscription, they're the one acting at least unethically (consider "has not logged into the service for 2 years").
You could drastically reduce the number of these particular disputes by requiring recurring subscriptions to be actively acknowledged by the customer eg. every 12 months.
I am going to go against the grain here. Disclaimer: I think these changes are shitty for a variety of different reasons.
I think it is okay for Visa to come up with a policy which disallows disputing a long unused subscription. User subscribed to the subscription, forgot about it, did not check their card statement for a while to know that they were being charged for it and then asked for a chargeback (presumably because the merchant denied them a refund). This is not Visa's problem.
One scenario where Visa should still allow chargebacks - a user tried to cancel the subscription, have proof they tried to, but the merchant is still charging them.
Now, should the merchant auto-cancel unused subscription? Hell, yeah. But, we should not blame Visa for coming up with a policy that does not allow such chargebacks.
I don't think people should be using chargebacks for this case. But I also think VISA is in a position to be putting some requirements on the merchants as well as the customers here - particularly if it can prevent the dispute from being filed in the first place.
Troubling to see Visa lumping a lot of behaviours together, and suggesting it the only legitimate use for chargebacks are second or third party fraud.
Merchants don't just have to deliver, they have to service their customers according to contract and consumer law. If something breaks or is otherwise faulty and the merchant blanks you, a chargeback is the correct next step. Nothing seizes attention like money being pulled out of your account.
There absolutely is fraud, and hats off to Visa noticing that mere trillions of dollars later, but they shouldn't allow merchants to skate by on proof of physical delivery.
> Those ramifications for merchants include losses that can be up to double the original transaction amount and increase a merchant’s chargeback ratio, which can impact their business and their bottom line.
I wish it were only double.
On a $50 digtal purchase, Stripe will charge you $1.75 in transaction fees but losing a dispute costs you the $1.75 in addition to a +$15 dispute fee that Stripe charges. Even if you can prove that the customer used your product with tons of usage logs and you even have a log of emails where the customer is asking questions that can only be asked if they used your product chances are you'll lose the dispute because most card vendors want to keep customers happy even if it means screwing a small business.
Note that other card processors don't charge the $15 fee. Stripe is a bit different as they are set up as the merchant (rather than the business) so chargebacks hurt them more than the standard merchant / card processor arrangement.
Fully agree with your final sentence though, some card processors rule against the merchant regardless of evidence supplied. It makes the whole process pointless. It's actually simpler to take a customer to small claims court than defend a chargeback, and at least the court will look at the evidence. Such a waste of resources, sadly.
TFA is saying Visa is amending their chargeback policy to empower merchants to continue billing people for long-forgotten subscriptions.
I'll not be using my Costco Visa card for anything other than Costco gas purchases from here on out. Visa is making their position clear; anti-consumer, anti-little-guy, pro-ripoff.
FYI usually banks keep accounts “shadow open” for upwards of 6mo in case a charge comes through. So you still may get over drafted.
These sort of schemes will probably make chargebacks harder to use than just closing the account that would do the billing. If the card is leaked/frauded than you’re already legally protected. If you just want to avoid the act of cancelling an account you opened… then you’re playing into the arms race that is making these things harder.
> but first party misuse, which can account for up to 75 percent of all chargebacks, is when a cardholder disputes a legitimate purchase that they intended with their issuer. This includes customers refuting valid purchases such as long-forgotten recurring subscriptions
If you agree to a purchase, and sign up for something re-occurring, you’re committing to it. You have to tell the business to stop charging you, you can’t just stop paying.
My point was mostly that you have an obligation to try to do it the right way, and that bank accounts are not usually “hard closed” and won’t reject dead charges.
Tbh I’ve never experienced this much failed cancellations so i don’t know for sure but there was a HN post about how easy arbitration was so honestly could be a good avenue. Or talk to your attorneys general
They have switched to a new process with an intermediary 'Patriot Bank' in the middle.
They pass your checking account info to Patriot Bank - somehow your transaction which was a simple debit is now a credit card transaction through this third party bank. Patriot Bank itself seems legit but I don't understand the process and have stopped using Privacy because of this change until I get my head wrapped around what is going on.
> “Reducing the impacts of first party misuse on small businesses requires industry-wide support,” says Julie Fergerson, CEO at MRC
Yes, please Mrs CEO, tell me more about small businesses... I think I hurt myself rolling my eyes at this.
This will primarily used by larger companies to fight legitimate chargebacks. If they had a reason to dispute the chargeback there are already means to do it, this process already exists. I can't imagine this new "program" is anything more than a way to screw consumers more.
Visa created the cost of a chargeback AND the process, why not take it up with them? They've swung from one extreme to the other, that's not an improvement.
Visa are the ones framing this as "fraud." Personally I view a business placing a cardholder in a position where they NEED to do a chargeback as anti-consumer.
The chargeback process needs to evolve wherein consumers actually abusing it lose, and businesses abusing consumers lose. Regardless it shouldn't cost a business anything if they WIN.
There are numerous stories in this thread alone about businesses continuing to charge people after cancellation and other good-faith interventions. Visa as essentially saying they won't help in those cases since the business can prove a pre-existing relationship. That's not ok.
Heck, maybe we need a kind of "unsubscribe" mechanism from Visa's side. Something that isn't a chargeback (which they'd reserve for actual fraud) but a mechanism where a vendor just cannot charge that card anymore without getting a NEW agreement/contract.
As someone with an online business, I welcome this.
99% of the chargebacks we see are first party fraud. We lose these disputes even after providing evidence. We've found and submitted Instagram posts of the customer wearing the item they claim to have "not ordered" or "never received". We've had customers communicate with us how much they "love" the item after receiving it, only to file a first party fraud related chargeback months later. No matter what evidence we provide, they always side with the customer.
I don't know what world people are living in, but as a business we have never won a chargeback dispute.
Maybe I'm naïve, but The type of person that does this seems like the type of person that would do this regularly. That is to say: files a large number of chargebacks, with similar reasons, likely facing merchant disputes with evidence.
It really seems like there should be some heuristics applied to the consumer: if some significant percent of transactions (either number or dollar amount) are charge-backs, something is probably wrong that warrants closer investigation.
Someone filing one chargeback per every thousand or more transactions is not trying to scam anyone. Someone who charges-back 50% or more of the transactions they make at online clothing merchants, on the other hand, definitely is.
I wonder if there's just no incentive for the card issuers to do this?
I agree, I wonder if those doing the frequent and fraudulent charge backs are paying 1000s in credit card interest yearly, and are actually good customers for the banks.
> If you are being honest, why are you posting this using a throwaway account?
Maybe he's new?
edit: I see you edited your phrasing to make it nicer, but... It looks like the dude posted under his real name (with a handle that he uses many other places).
An odd time to finally decide to join HN. With no account history, how can the community distinguish between legitimate discourse and shills for a controversial big business agenda story like this?
This is the kind of story that gets picked up by HN first and then ends up published in mainstream media the following week.
Anyhow, I don't defend cardholder fraud, and at the same time I've been ripped off too many times by merchants. They tend to err on the side of themselves, perpetually fleecing masses of real-life flesh and blood human beings.
@mlyle: I appreciate you taking the time to dig into it more and raise the controversy to my attention. This is a helpful way to be, you are great.
People tend to join when an issue that's important to them comes up.
Everyone (retailers, consumers) unhappy with the chargeback system. Honest merchants lose lots of money all the time. It can be difficult to make a chargeback for many kinds of dark patterns (e.g. subscription traps). The fact that everyone's mad makes me think it may not be too tilted against any party, but one would hope it could work better overall.
> @mlyle: I appreciate you taking the time to dig into it more and raise the controversy to my attention. This is a helpful way to be, you are great.
I have a hard time with benefit-of-the-doubt here and get reprimanded a fair bit. :D Just doing my best to improve things where I can.
I've been reading HN for nearly a decade and never commented, but mlyle has it spot on: this is an important issue to me and nearly all the commentary here was one sided.
Thank you for your comment and perspective on this.
It is more likely that most of the comments are from consumers that (secretly) actually do chargeback fraud themselves and have not run a small business and also want merchants, and businesses like yourself to lose all the time. I see it in digital subscriptions, influencers doing it and even users trying to lie their way into getting the service or product for free and the chargebacks hurt both the consumer and the merchant.
It is indeed an important issue that must be tackled.
> It is more likely that most of the comments are from consumers that (secretly) actually do chargeback fraud themselves
*sigh* I think this is also unfair and presumes bad faith.
Both honest consumers and honest merchants have a lot of reasons to feel aggrieved about how chargebacks are handled... and reasons to fear it getting worse.
The worst of the dishonest of each lot have figured out how to tilt the current system to their favor, and may be quite happy with the status quo.
I'm just sharing my perspective as someone that is actually negatively impacted by this. I lose money and my product. Again and again.
I suspect most people think a chargeback dispute is a carefully and fairly adjudicated process, where both sides are heard equally and an evidence based decision is made. From my experience, this is not the case.
As a customer, want to win a dispute 100% of the time?
Here are a few claims that always work:
1. I didn't make the purchase
2. I didn't receive the item
3. The item doesn't "match the description"
Regardless of evidence (eg. signature delivery with ID check), we have never won a dispute in these cases.
We just want the dispute process to be fair - and hopefully this change by Visa gets closer to it.
I appreciate you sharing this additional context, Luke. Please know, I'd never stiff you.
IMHO, the whole CC business reeks. Visa and MasterCard are so big, the top brass have little or no incentive to care about the individual cardholders or the small businesses who rely on them to push transactions through fairly. The entire thing is perverse, and the real human beings at the ends suffer the consequences of the executives' ambivalence to reality.
The thing that's always a problem: the bad actors get lots of practice at being bad.
The individual honest consumer who needs to chargeback or the innocent merchant who's getting scammed is doing something they only do rarely, and so they're bad at it.
The scammer customer or the subscription-fraud-dark-pattern merchant has honed their practices to win chargebacks.
No matter what country I am in and whether they had consumer affairs ombudsmen, filing a chargeback dispute with the merchant (in my case Visa) was the best protection I ever got from dodgy vendors charging me after I cancel a subscription or fail to provide the agreed upon services. Even the hint that I am going to do it usually gets the vendors to act and quickly. I hope that this doesn't go away.
As a customer who has had to go through the chargeback process (against a well known furniture company), the company provided what they felt was “proof” of the charge being valid.
Fortunately, I had counter-proof that the proof they supplied was invalid. I won the dispute in the end.
Under this new policy, it seems my chargeback would have been denied without coming back to comment … am I reading this correctly? If so, then this is one major reason now for me not to use Visa in future.
This is how I am reading it. I will be asking my wife to not use VISA for any recurring payments ( as those apparently will be to be harder to dispute ).
The primary benefit of credit card was the included consumer protection. If that is gone, credit card will stop being as beneficial.
> This includes customers refuting valid purchases such as long-forgotten recurring subscriptions, or children given access to use their parent’s card to make purchases with parental approval.
> Those ramifications for merchants include losses that can be up to double the original transaction amount
Is there a better argument for this that they're failing to make here?
Because if I take this at face value, I feel like if your business is racking up so many of these charges that it's affecting its bottom line, maybe it suggests your business is itself the problem? Why is your business surprising customers with charges if it's actually providing them with something of value? Doesn't it sound like your business relies on tricking people into forgetting to cancel subscriptions in that case?
> “Friendly fraud is not always friendly, especially from a merchant’s perspective,” said Mike Lemberger, Senior Vice President of North America Risk at Visa.
Incredible quote, Mike must be the smartest guy in the whole company!
"At Visa, our goal is to reduce all types of fraud in the ecosystem"
Bullshit. If that were true, card providers in the USA would be using chip-&-PIN the way the rest of the world has been for 10 years or more. We finally JUST got cards with chips in them... which are largely neutered by the idiotic continued use of SIGNATURES (or nothing).
> When most people think of fraud, they think of stolen account numbers or identity theft, but first party misuse, which can account for up to 75 percent of all chargebacks1, is when a cardholder disputes a legitimate purchase that they intended with their issuer. This includes customers refuting valid purchases such as long-forgotten recurring subscriptions, or children given access to use their parent’s card to make purchases with parental approval.
sounds like BS. if it's because a child made the purchase or they forgot to cancel subscription, why don't they deny the claim? it's not like every dispute claim has to approved.
this is akin to Visa and other credit card providers removing price match policy for purchases (up to n days from purchase date). one of the issuers said they are removing it because no one uses them. BS. if no one uses them, why not keep it for 1% of users who benefit from it?
Where's our right to get out of unwanted subscriptions more easily? They're disputed because that's the easiest way out sometimes! Marking the dispute as "leave existing charge, deny future charges" would be more consumer friendly.
McDonald's didn't have the item I ordered for my kids and wouldn't give me a replacement or a refund.
I logged a support request asking for a refund. The franchise owner called me and said since the order came from the McDonald's mobile app he is unable to refund me --- he said, please file a chargeback instead.
This was under $5 and was auto approved by Chase as a courtesy credit but I wonder if, in the future, the fact that I've used the card in the McDonald's mobile app in the past means it would be auto denied?
First, the term "friendly fraud" sounds terrible; First-party fraud at least conveys the meaning clearly without the marketing dressup.
Second, how does this not weaken the rights of the card-holder?
> This change will empower merchants to protect themselves against first party misuse by enabling them to submit additional evidence that a purchase was indeed legitimate and authorized by the cardholder in order to stop the dispute claim. Additional examples that can help identify that a purchase is legitimate include a customer using the same payment credential previously at the merchant, login credentials, proof of use of a product and more.
So, for the 80% of the cases (based on Visa's own data citation in the article) where there was a legitimate chargeback, the third-party perpetrator of the fraud just has to use the product which perhaps shows up as "evidence" to the merchant that could be used to deny the chargeback. This somehow reeks of nonsense and is just a weakening of the cardholder's rights and protection of their credit/reputation.
Firstly, I assume this only impacts chargebacks that come under the "fraud" category. Where a consumer just tells their card issuer "it wasn't me", but in fact it was them. Ok great...
The chargeback "defence" or "arbitration" system for both parties is a joke, that's the real problem that is being glossed over here. And that includes systems with decent UX (eg. stripe).
As a merchant, if a user puts in a fraudulent chargeback, you can currently defend it with all the evidence / proof in the world - and the card issuer can still process the chargeback. The incentives are aligned for them to do that in fact.
As a consumer, chargebacks are an incredibly important mechanism. But equally the evidence you provide is normally just for the card provider. That information is never passed onto the merchant, just the high level "category" of the chargeback. The merchant has to guess at what actually went wrong, or reach out to the customer and ask them to provide all the same information over again. If a user made a genuine mistake (eg. Didn't recognise the transaction), there is no "cancel" button. There is a whole convoluted process for withdrawing a chargeback. The saving grace for consumers is that card issuers just tend to side with the end-user. The merchant is left clueless as to what the user's real issue was.
But the unspoken downside is that these cases end up in small claims courts, that are a drag on the court system, and potentially end up with the end user having a court judgement against them because they provided some misleading information and didn't realise the consequences.
There has to be a better system - I'm just not sure this change is it. It just shifts the category of fraudulent chargebacks to a different one.
Perhaps this explains the rise in American Express's stock price today. Amex has perhaps the best customer service I've experienced (maybe that says more about me than them :).
While Visa is a card network, Amex is both a network and an issuer. Visa works with issuing banks like Chase, so as a Visa cardholder, you would interface with the bank rather than with Visa when reporting an unrecognized charge.
Given that Amex is an issuer, I could imagine that there might exist more incentives to side with the cardholder versus a merchant for disputes, as compared with a company that operates as a network but not directly as a card issuer.
> “With this change, if merchants can provide additional data or evidence to show that the disputed charge is valid, then the dispute will be invalid.”
?? What?
The credit card systems today don’t produce much evidence—what are they referring to here?
We had 100 BigMacs before the charge and afterwards we had 99?!?
As a subscription vendor, I can tell you I have never found or achieved the level of evidence required to successfully dispute a chargeback. I don't even bother anymore. This seems like a welcome change of attitude.
I wonder how much of this is in reaction to people doing chargebacks on transfers to failed crypto exchanges (which apparently people have been doing) ...
This is not how it works in Europe or in the US. The chargeback occurs through the payment processor, and both the merchant and the bank issuing cards with Visa logos are customers of Visa using their payment network to manage charges. When your bank issues the chargeback on your behalf, they are doing so through Visa's systems.
If those obligations are by law in your jurisdiction, than you are probably covered. In jurisdictions where that is not the case, the bank is bound by Visa's policies if they want to issue Visa logoed cards. That's why this is such a far-reaching and problematic development.
I have been hit many times with unintended auto-renewal. The merchant hides a clause in terms & conditions that the subscription will be auto-renewed upon expiration, then at the end of the year, wham! you get hit with an unexpected charge. Then you have to call the merchant to cancel, be on hold for 30+ minutes, the whole rigmarole.
What is Visa doing to protect the consumer in this case? Auto-renewals should always be explicitly opted-in by the cardholder.
> A recent study by SIFT found that nearly one in five consumers who have filed a chargeback dispute have committed first party fraud by submitting false claims in order to get their money back on legitimate purchases. In fact, according to the NRF, the losses from friendly fraud totals over $25 billion a year.
Yes, this is a problem and so many merchants are getting their accounts and funds locked up by being unable to fight these friendly fraud disputes that have been taken advantage of by the consumer.
This sort of fraud hurts both the consumer and mostly the merchant as the bank which doesn't know any of the context of the payment takes 3 seconds to see the dispute and 98% of the time, the merchant loses and the bank forcibly takes the money away and gives it back to the customer, especially for digital subscriptions. Instead the consumer should contact the merchant directly to resolve the dispute.
At least VISA knows it is a problem. What is Mastercard doing about this?
> Instead the consumer should contact the merchant directly to resolve the dispute.
Hahaha. Have you tried this recently? I had a company ship us defective baby food with broken seals. They said they couldn’t refund but they were happy to ship us a replacement. When we said we wanted a refund instead, they said “whoops we already shipped it”. It arrived with more broken seals. I issued a chargeback. Got my money instantly.
Some merchants are bad. Visa’s whole value to me is that they insure me against these situations.
Congratulations. You have accidentally proven my point and they won't do business with you again with that chargeback, hence why I have said it hurts both the consumer and the merchant. They will just edit their terms of service policies for refunds and add chargeback protection on top of that and any chargebacks will result in a terminated / banned account.
I have seen many have dared to do this with digital purchases and subscriptions. For instance many have tried to services from Sony, Nintendo, Microsoft, Amazon etc and as soon as the customers got their money back, 99% they were crying and complaining that their accounts got locked and banned immediately and lost all their digital purchases due to that chargeback dispute they filed against them.
As for the merchants using Shopify, PayPal or Stripe, the moment a merchant receives tons of fraudulent chargebacks from consumers, they also start crying here on HN about their accounts and funds getting locked.
So over time, the merchants will edit their refund policies to make sure that it will be even harder to get a refund next time and put in place whatever chargeback protection systems that the payment providers have in place for these merchants hence why it hurts both of them.
Yes, some consumers are bad too. You didn’t engage with my point though. Have you had generally good experiences trying to resolve disputes with merchants directly as a consumer?
When both sides of a marketplace are willing to commit fraud, what can the middleman do? Most likely not much. As long as purchases are not "notarized" or otherwise observed in person by a neutral third party, it is very, very difficult to reliably and fairly police unethical or fraudulent intentions for internet purchases.
> Instead the consumer should contact the merchant directly to resolve the dispute.
I agree, for the cases where this is reasonable. Unfortunately plenty of companies engage in extremely bad faith efforts to make it absurdly hard to cancel a service or resolve an issue. My concern is that these sorts of companies are the ones that will benefit from this change. An ethical company that makes it easy to understand charges, cancel services, or handle issues probably gets far fewer chargebacks than one that makes cancelling as painful as possible. Visa does have a financial interest in processing more charges, so I wouldn't automatically assume good faith on their part.
I’m pretty opposed to this change, even though it’s veiled in terms of fairness. The fact is, the banks and Visa are far too quick to deny disputes.
This reeks of all of the times that an industry foists some type of “protection“ on consumers to address some alleged abuse of the system.
For example, you used to be able to discharge student loans in bankruptcy. Then the industry made up a BS narrative that people were taking out tons of loans, getting their degrees, and then filing for bankruptcy em masse. It was a lie. The number of people who are filing for bankruptcy and getting student loans discharged was infinitesimally small. But that didn’t stop them from lobbying Congress for modifications that prohibit the discharge of student loans in bankruptcy. And, well, you know how the rest goes.
My point is, the alleged abuse is almost certainly a very small, or even, non-issue. But these changes will have dramatic, negative repercussions on a large swath of customers.