Understanding the 2015 U.S. Fraud Liability Shifts

Publication Date: May 2015

Today, for most counterfeit card fraud that occurs at retailers’ in-store locations, liability is with the card issuers. Beginning in October 2015, that liability will shift to the merchants in certain cases unless they have replaced or upgraded their card acceptance and processing systems to use chip-enabled devices and applications to process payment transactions. With the October deadline fast approaching, many card issuers, merchants and processors implementing EMV chip technology are asking, “Who is liable for what and when under these fraud liability shifts?”

The EMV Migration Forum white paper, Understanding the 2015 U.S. Fraud Liability Shifts, provides information collected from certain payment networks to assist merchants, acquirers, processors and others implementing EMV chip technology in the U.S. to better understand liability shifts. This document simplifies essential information surrounding the liability shifts to help stakeholders meet these dates and to streamline the migration to chip technology.
The following liability shifts and payment networks are addressed in the white paper:

  • Counterfeit Fraud Liability Shift. Applies to the following payment networks: Accel, American Express, China UnionPay, Discover, MasterCard, NYCE Payments Network, SHAZAM Network, STAR Network and Visa
  • Lost or Stolen Fraud Liability Shift. Applies to the following payment networks: American Express, Discover and MasterCard
  • Liability Shifts for Cross-Border Transactions. Applies to all global payment networks

The white paper highlights the fact that, as a generality, the party supporting the most secure technology for each fraud type will prevail in a chargeback; and in case of a technology tie, the fraud liability as of October 2015 generally is expected to remain as it is today – with the issuer.

The document covers common scenarios and only those payment networks that provided information to the EMV Migration Forum in the preparation of this document. There are other scenarios that could affect liability that are not covered in this document and other networks that did not provide information that may have liability shifts. Merchants, acquirers, processors and others implementing EMV chip technology in the U.S. are therefore strongly encouraged to consult with their respective payment networks regarding applicable liability shifts and rules.