• CITGO Caps Coverage of Fraud Chargebacks at Pump

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    CITGO Petroleum Corp. is limiting its chargeback coverage for payment card
    fraud at the pump even before the big deadline for outdoor chip card acceptance
    kicks in next year.

    By Oct. 1, 2020, the large payment card networks will shift certain fraud
    liability to gas stations that fail to accept chip cards at the gas island. The
    deadline for avoiding fraud liability by accepting chip cards indoors was Oct.
    1, 2015.

    Many of the major brands indemnified branded stations against payment card
    fraud until hardware and software for chip card acceptance was widely available
    indoors. The payment card networks postponed the liability shift at the pump by
    three years, and the majors generally have seen the delay as sufficient.

    However, the prevalence of card fraud forced the card networks and, now, CITGO
    to cut their losses to penalize high-risk gas stations that exceed certain
    fraud thresholds ahead of that 2020 deadline for island card readers.

    In an announcement of its 2019 Island Card Reader Fraud Program, CITGO has told
    marketers that locations exceeding the chargeback limits outlined by the card
    brands will be liable for all island card reader (ICR) chargebacks.

    Effective Jan. 1, CITGO placed a cap on how much ICR fraud it will cover
    unconditionally. The major said it will cover up to $500 in chargebacks in
    full. However, when chargebacks exceed $500, it will provide full coverage only
    if the station proves it is taking certain steps to deter fraud.

    With excessive chargebacks, CITGO stations must:

    --Use CITGO security seals properly;

    --Install customized locks on dispensers;

    --Log and perform pump inspections, at minimum on a daily basis (inspections at
    shift change are recommended); and

    --Check for skimmers or other foreign devices and notify local authorities and
    CITGO of any "abnormal" findings.

    In its 2018 ICR Fraud Program, CITGO required ZIP code verification, and that
    procedure remains mandatory except in New Jersey where it is prohibited, the
    major said. CITGO stations also must have PCI-compliant software (compliant
    with Payment Card Industry standards).

    But as CITGO spelled out last year, it refuses to absorb fraud losses if: a
    station employee is involved; the location overrides certain parameters; the
    station is aware of the fraud but fails to act; the issuing bank determines the
    site is the "point of compromise;" or the location exceeds a card brand's
    excessive chargeback threshold.

    --Donna Harris, dharris@opisnet.com


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