A US Courts of Appeal judge affirmed the earlier ruling of a US trial court that visa card acted appropriately when it reversed the fund transfer it had made to a merchant affiliate. It also junked appeals of the said merchant, ANS, saying that the contract they and VISA signed stipulated that Visa can reclaim any fund transfer on behalf of the company if it finds any fraudulent activity in a given transaction.
ANS, a company that engages in selling and distribution of gas supplies and equipment, forged a partnership with VISA, making the credit issuer a payment partner. Under their contract, clients of ANS can use visa cards to pay for products and services that they purchase. VISA then transfers funds representing the purchases to ANS accounts. It was also stated in this contract that VISA has the right to take back funds that they have transferred to ANS if they find a particular transaction, upon which a card was used, to be fraudulent.
This case stemmed from an incident in 2005, wherein VISA transferred funds to ANS from VISA credit card purchases made by the gas supply dealer's clients in Singapore. Amount of the purchase totalled to $150,000. However, upon inspection the credit card company discovered that this transaction was fraudulent and promptly took funds back from ANS.
ANS countered by filing a court case against VISA stating that the latter acted illegally when it took money back from the former and that Visa failed to acknowledge a verbal agreement it had with ANS about fraud investigation.
When this case was first heard in a trial court, the presiding judge ruled in favour of the defendant stating that VISA was within bounds when it decided to recover the money from ANS. He stated that VISA's actions were prescribed in a mutual contract between the two companies. ANS filed a motion for appeal and requested that the verdict be reviewed.
During the hearings in the Appellate court, ANS presented a witness its comptroller, Thomas Spencer, who under oath stated that VISA charged higher transaction fees for purchases made online, which his company believed is for the additional fraudulent investigation services that the credit issuer would perform for transactions done online.
However, Spencer failed to produce evidence such as contracts or memorandum or agreements that would prove that VISA indeed would be charging for fraudulent check activities made for online purchases.
A lack of supporting evidence left the Court of Appeals no choice, but to reaffirm the earlier decision of the concerned US trial court, acquitting VISA of all charges made by ANS.