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March 2015

pecial Bulletin

Overview

This special bulletin provides information regarding High Risk


Service Establishment (S/E) Policy. Please share this bulletin with
the appropriate personnel in your organization. If you have any
questions, please contact your AEGNS Representative.

In This Issue

High Risk Service Establishment (S/E) Policy


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This document contains sensitive, confidential and trade secret information, and may not be disclosed to
third parties without written consent of American Express Travel Related Services Company, Inc.

March 2015

igh Risk Service Establishment (S/E) Policy

Background

AEGNS reviews S/Es by monitoring reported fraud data, S/E data,


Authorizations, and Presentments for risk patterns. To address
fraud risk concerns, AEGNS may require Acquirers to place S/Es
that meet certain criteria on the High Risk S/E list. AEGNS currently
considers an S/E a High Risk S/E when it meets at least one of the
following criteria:
Description

Risk Indicator
S

An S/E has been cancelled for being a Fictitious S/E.


An S/E has been cancelled for being an illegal business, or in a prohibited industry.

An S/E has Fraud To Gross (FTG) sales volume ratio that equals or exceeds a threshold
determined by AEGNS, currently 8%.

An S/E is identified as conducting business in a high risk industry.

An S/E has been cancelled for derogatory reasons.

AEGNS is announcing changes to the criteria for two (2) risk


indicators, F and T.
The criteria for high risk indicator F will be modified. The FTG
sales volume ratio of 8% (excluding fraudulent application or
non-received fraud) and three (3) or more unique Card Accounts in
a six (6) month period will be modified to an FTG sales volume of
8% (excluding fraudulent application or non-received fraud), two
(2) or more fraudulent Transactions, and a minimum total fraud
amount of $3,000 USD in a six (6) month period.
AEGNS will modify the criteria for risk indicator T to include only:

S/Es conducting business in Merchant Category Code 5542,


Automated Fuel Dispensers, and

S/Es conducting Internet Electronic Delivery Transactions, for


example, delivery to the Cardmember, via Internet download or
another file transfer process, of Goods or Services purchased on
the Internet.
continued on next page

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This document contains sensitive, confidential and trade secret information, and may not be disclosed to
third parties without written consent of American Express Travel Related Services Company, Inc.

March 2015
S/Es currently on the High Risk S/E list with high risk indicators of
F and T will be evaluated to determine if they meet any of the
High Risk S/E criteria (refer to Section 8.9.2, High Risk S/E
Criteria, of the Business and Operational Policies manual for
additional information). Those that are not classified as high risk
under another indicator will be removed from the list. S/Es
classified as high risk under another indicator will be assigned that
indicator and remain on the High Risk S/E list per the current
policies.

Benefits

These policy changes will:

Align more closely with industry practices by removing most of


the criteria that automatically place S/Es on the High Risk S/E
list based on industry classification

Encourage S/E acceptance in industries previously impacted


by the High Risk S/E policy, which may increase Cardmember
spend

Effective Date

September 1, 2015

Impact to
Acquirers

For risk indicator T - Acquirers must submit to AEGNS an


updated S/E Demographics Detail Data (9640) message
identifying S/Es that meet the updated criteria.

For risk indicator F S/Es that are currently on the High Risk
S/E list will be reviewed to determine if they meet the updated
criteria. S/Es that do not meet the updated criteria will be
removed from the High Risk S/E list while S/Es that meet the
updated criteria will remain on the High Risk S/E list.

If AEGNS determines that an S/E not currently on the High Risk


S/E list meets the updated criteria, AEGNS will notify the
Acquirer with a High Risk listing recommendation via the S/E
Actioning System (SEAS) on GNS FraudNet.

Acquirers are encouraged to review their S/E portfolio to identify


S/Es that will be affected by the policy changes and action
according to their internal policies.

Impact to Issuers

Issuers must review the High Risk S/E list to make sure an S/E is on
the list prior to processing a Chargeback for ISO 4763 - Fraud Full
Recourse.
continued on next page

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This document contains sensitive, confidential and trade secret information, and may not be disclosed to
third parties without written consent of American Express Travel Related Services Company, Inc.

March 2015

Additional
Information

For more information regarding the High Risk S/E policy, please
contact your AEGNS Representative.

Changes to
Publications

The policy and technical changes detailed in the following sections


will be published in the October 2015 Business and Operational
Policies manual and Codes Reference Guide.
continued on next page

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This document contains sensitive, confidential and trade secret information, and may not be disclosed to
third parties without written consent of American Express Travel Related Services Company, Inc.

March 2015

Policy Changes
Summary of Policy
Updates

AEGNS is announcing changes to the High Risk S/E Policy criteria for
two (2) risk indicators, F and T. AEGNS will make changes to the
following sections of the Business and Operational Policies manual
to describe the new criteria:

ISO 4763 - Fraud Full Recourse

Section 8.9.2, High Risk S/E Criteria

Section 8.9.2.3, Fraud to Gross Sales Volume Ratio

Section 8.9.2.4, High Risk S/E Industries

Chapter 7 Policy
Updates

ISO 4763 - Fraud Full Recourse


Chargeback Type

Fraud Chargeback

Chargeback Reason

The Card Account is closed or the Card is canceled at the time of the Transaction or, the
Cardmember denies participation in the Transaction and the S/E is listed on the High
Risk S/E list.
The Fraud Full Recourse Chargeback allows Issuers the right to transfer liability of all
fraud types, including counterfeit Cards, to the Acquirer for any S/E subject to this
Chargeback.

Description

POS/ATM Eligibility

Processing under this reason code requires that the S/E was listed on the High Risk S/E
list at the time of the Chargeback under one (1) of the following categories:
1)

A fictitious S/E who is listed on the High Risk S/E list with a risk indicator of S, or

2)

A prohibited or illegal industry S/E who is listed on the High Risk S/E list with a
risk indicator of I, or

3)

A high Fraud to Gross (FTG) sale volume ratio S/E who is listed on the High Risk
S/E list with a risk indicator of F, or

4)

An Internet Electronic Delivery or Automated Fuel Dispenser S/E who is listed on


the High Risk S/E list with a risk indicator of T, or

5)

S/E was canceled for derogatory reasons and was listed on the High Risk S/E list
with a risk indicator of X.

POS only

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This document contains sensitive, confidential and trade secret information, and may not be disclosed to
third parties without written consent of American Express Travel Related Services Company, Inc.

March 2015

ISO 4763 - Fraud Full Recourse (Continued)


Excluded Transactions

1)

AEIPS-compliant Chip Card Transactions were processed at a Customer


Activated Terminal (CAT) where the validated Transaction Certificate provided in
the First Presentment indicates the Transaction was completed with a validated
PIN.

2)

Transactions that qualify for the American Express SafeKey Fraud Liability
Shift. Refer to Section 7.9.8.3, American Express SafeKey Fraud Liability
Shift, for additional information.

3)

Transactions that qualify for the AEGNS Oil Fraud Liability Shift Program. Refer
to Section 7.9.8.4, Oil Fraud Liability Shift Program, for additional information.

4)

Expresspay Transactions of less than or equal to the Chargeback Protection


Threshold listed in Table 4-1, Expresspay at TAT - Operational Parameters,
completed at a TAT.

Minimum Amount

$0

Chargeback Maximum Time to


File

165 days from the Network Processing Date of the Presentment.

Conditions

The Issuer must meet all the following conditions:


1)

May be used even if the Transaction was Authorized.

2)

Amount to be charged back is the full Transaction amount.

3)

Before filing this Chargeback, the Issuer must manually enter the fraud
Transaction into the WFIS or electronically transmit it into the GNS Fraud
Repository.

Retrieval Required

No

Issuer Support

Cardmember Documentation or Issuer Declaration that supports the Chargeback.

Second Presentment Acquirer


Responsibility

One (1) or more of the following items must be provided:


1)

Proof that the S/E was not listed on the High Risk S/E list at the time of the
Chargeback.

2)

Proof that a correcting Transaction, which directly offsets the disputed


Transaction, has already been processed.

3)

Proof that the Transaction falls into one (1) of the excluded Transaction types.
continued on next page

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This document contains sensitive, confidential and trade secret information, and may not be disclosed to
third parties without written consent of American Express Travel Related Services Company, Inc.

March 2015

8.9.2. High Risk S/E Criteria


AEGNS considers an S/E a High Risk S/E when it meets at
least one of the following Criteria (listed in hierarchical order,
most severe to least severe):
1.

An S/E has been cancelled for being a Fictitious S/E.


See Section 8.9.2.1, Fictitious S/E.

2.

An S/E has been cancelled for being an illegal business,


or is in a prohibited industry. See Section 8.9.2.2, Illegal or Prohibited Industry.

3.

An S/E has a Fraud To Gross (FTG) sales volume ratio


that equals or exceeds 8%, excluding fraudulent applications and non-received fraud, involving two (2) or
more fraudulent Transactions with a minimum total
fraud amount of $3,000 USD in a six (6) month period.
See Section 8.9.2.3, Fraud to Gross Sales Volume
Ratio.

4.

An S/E is identified as conducting business in a high risk


industry, as described in Section 8.9.2.4, High Risk S/E
Industries.

5.

An S/E has been cancelled for derogatory reasons. See


Section 8.9.2.5, Cancelled S/Es (Derogatory).

8.9.2.3. FTG Sales Volume Ratio


When an S/Es fraud level equals or exceeds an 8% FTG sales
volume ratio, excluding fraudulent application or non-received
fraud, involving two (2) or more fraudulent Transactions with
a minimum fraud total amount of $3,000 USD in a six (6)
month period, the Acquirer will be notified of the S/Es
addition to the next months High Risk S/E list with a risk
indicator of F.
S/Es must be left on the High Risk S/E list until their FTG ratio
falls below and remains below 8% for six (6) consecutive
months. Following that period, the Acquirer may make an
appeal to the AEGNS Fraud and Security department for
removal of the S/E from the list. Other performance criteria
may be evaluated prior to the removal of the S/E. In the
event the AEGNS Fraud and Security department finds the
S/E still a high risk, the request for removal will be denied for
an additional three (3) months, after which time another
appeal may be made, starting the process over again.
continued on next page

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This document contains sensitive, confidential and trade secret information, and may not be disclosed to
third parties without written consent of American Express Travel Related Services Company, Inc.

March 2015

8.9.2.4. High Risk S/E Industries


S/Es conducting business in high risk industries must be
added to the High Risk S/E list with a risk indicator of T
upon new S/E signing. If the Acquirer, subsequent to signing
an S/E, identifies, or is notified by AEGNS that the S/E is
conducting business in a high risk industry, the Acquirer must
add the S/E to the High Risk S/E list within thirty (30) days of
such identification or notification. S/Es conducting business in
high risk industries that must be added to the High Risk S/E
list with a risk indicator of T are identified as follows:

Automated Fuel Dispenser S/Es with Merchant Category


Code 5542

S/Es conducting Internet Electronic Delivery Transactions

Active S/Es with a risk indicator of T must remain on the


High Risk S/E list until the S/E is either cancelled by the
Acquirer or no longer conducts business in a high risk
industry.
continued on next page

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This document contains sensitive, confidential and trade secret information, and may not be disclosed to
third parties without written consent of American Express Travel Related Services Company, Inc.

March 2015

Technical Changes
Summary of
Technical Updates

The description for Card Acceptor High Risk Indicator T has been updated.

The Card Acceptor High Risk Indicator is used in the S/E Volume Summary and S/E Volume Summary Response messages to indicate the risk status of the Card Acceptor (S/E). Use the Card Acceptor High Risk Indicator in this record:
Records
Record Name
S/E Demographics Detail Data

Message Type

Position

9640

522

Field Name
Card Acceptor High Risk Indicator

This table supplies the value and description for each Card Acceptor High Risk Indicator.
Card Acceptor High Risk Indicators
Card Acceptor High Risk Indicator

Card Acceptor High Risk Indicator Description

A fictitious S/E setup

A prohibited or illegal industry S/E

An S/E with a high Fraud to Gross Sale Volume ratio (FTG that equals or
exceeds 8%)

An S/E with risky transactions in Internet Electronic Delivery or Automated


Fuel Dispenser S/Es (MCC 5542)

An S/E that has been cancelled for derogatory reasons

An S/E that is not fraudulent or high risk and therefore is not subject to ISO
4763 - Fraud Full Recourse Chargeback.
Note: When an S/E is removed from High Risk (the S/E no longer meets
the criteria for a High Risk S/E), the High Risk Indicator is changed to N.
The high risk status is updated overnight.

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This document contains sensitive, confidential and trade secret information, and may not be disclosed to third parties
without written consent of American Express Travel Related Services Company, Inc.