Who is liable for fraudulent disputes that have been authenticated and processed on a 3D Secure payment source?

• A. Merchant
• B. Card Issuer
• C. Payment Processor
• D. Customer

Answer: (B)

When a transaction has been authenticated and processed through 3D Secure, the card issuer, which is the bank that issued the customer’s credit or debit card, assumes liability for fraudulent disputes. This means that if a customer initiates a chargeback after verifying their identity through the 3D Secure authentication process, the card issuer cannot hold the merchant financially responsible for the chargeback.

3D Secure serves as an additional layer of security for online transactions. By requiring customers to complete an additional verification step, it helps to ensure that they are indeed the legitimate cardholders making the purchases. Since the card issuer benefits from the protection provided by this process, they are responsible for the risks associated with fraud linked to authenticated transactions.

This liability shift is an integral part of reducing fraud risk for merchants and encouraging the adoption of secure payment technologies. As a result, merchants can operate with greater confidence that they are protected against certain types of fraudulent activity once transactions are successfully authenticated through 3D Secure.