Preventing Failed AVS Fund Holds for Debit Card and Check Cards

One of the biggest customer complaints we're seeing on our stores are fund holds due to failed AVS checks. Here's what happens:

1. A customer visits your store and attempts to make a purchase. The customer enters an address that does not match the billing address for the card. This fails address verification system (AVS) that most merchants use to detect and prevent fraud. The order doesn't progress past the store's payment gateway and does not turn into a sale.

2. The customer's bank places a hold (or authorization) for the amount of the attempted sale. Your online store is listed as source of the authorization. This typically happens when the customer uses a debit card or check card and fails the AVS.

3. The customer wonders why they were "charged" for an order on your store that didn't complete successfully. They then contact the store asking for an explanation of the charge.

4. The merchant is powerless to alter credit or void the authorization. Only the issuing bank and release the hold. The customer must contact the bank and request that the funds be release. Otherwise, the bank will release the funds once the authorization expires. This can be 3 days or as long as several months. Needless to say, this really bothers the customer.

This whole scenario is huge pie in the face for the merchant. They are powerless to prevent it (turning off AVS is not recommended) and powerless to correct the matter after it has occurred. To make matters worse, the bank statements make it appear that the online store requested the authorization or hold.

The only solution is a long explanation to the customer that rarely is received well. Your store suffers credibility and virtually kills the chance of that customer returning for any future purchases.

All the merchant can do is try to educate the customer during the checkout process and update the online store’s Terms and Conditions to cover this scenario.

Some stores have added a note close the billing information during the checkout process to let the customer know that the billing information must match the billing address for the card used. If not, the customer is warn about the potential for a fund hold by their bank.

Here’s a boilerplate section to add to your online store’s Terms and Conditions:

Update your Online Store's Terms and Conditions to cover Failed AVS Fund Holds

If a debit card or check card is used to make a purchase on the "YourStore" website, and the purchase was not accepted for any reason (failed AVS or CCV verification), please be aware that most banks will hold the "authorized" funds (counting against your balance until the authorization clears) even if your order was rejected by our security measures. The most common reason for the failed transaction is that the billing address entered does not match the billing address for the debit/check/credit card being used for payment. Our Address Verification System (AVS) security measures will reject any transaction for a billing address mismatch.

"YourStore" does not have the capability nor is not obligated to release the bank's temporary hold on authorized funds. Since we do not have the capability to release the bank’s temporary hold, we can not be responsible for the policies of the customer's banking institution regarding the holding of authorized funds. Please note that authorization fund holds last for varying periods, depending on the issuing credit card company's policy. The period may be as little as three days or as long as several months. We suggest that the customer contact the issuing credit card company or bank in order to resolve these types of situations.