I understand that people may have legitimate needs for a VPN, but as someone who has to deal with credit card fraud almost daily, I can understand their reasoning.

Sure it sucks if you need a VPN, but if you're someone trying to catch people trying to defraud you it makes a lot of sense. VISA and MasterCard has rather high demands from businesses when it comes to preventing fraud, so naturally we have high demands to them. Restricting access to VPNs is a simple way of blocking a large number of low ranking fraudsters.

I can see blocking CC transactions that originate from a VPN provider's IP space, as having a high risk of fraud. But this is about blocking payments to the VPN providers, which seems somewhat different. Are they worried that the purchase of VPN services is itself often done via CC fraud? From the statement it sounds like they're more worried about the existence of VPN services at all.

It doesn't personally affect me, though, because just about anything you can do via a VPN you can do by buying a VPS and ssh -D'ing through it. It takes slightly more technical skill, but anyone who can operate PuTTY can do it after reading about 1 page of instructions. And I consider it unlikely that Visa will start blocking payments to Linode or Digital Ocean...

>But this is about blocking payments to the VPN providers, which seems somewhat different. Are they worried that the purchase of VPN services is itself often done via CC fraud?

Yes. the nature of credit card "security" is that, well, there is no security. The agreement between the merchant and the bank is that if anything goes wrong, the merchant has to return the money.

This means that they generally only want to give merchant accounts to people who are "good for it" - they will check your credit, and if it isn't awesome, they will either hold back a bunch of your money, or deny you outright.

They want to avoid industries with a lot of chargebacks for the same reason.

"adult content" has the same problem... you get a /lot/ of chargebacks, so if you want to have a merchant account and sell adult content? well, you are going to pay substantially higher fees, and you are going to have a limited number of providers who will take you at all.

But yeah, from what I've seen, reputable VPS providers have fairly low chargeback rates. I've never run a VPN service, so I wouldn't know, but from what I have been told, the chargeback rate is way higher.

> just about anything you can do via a VPN you can do by buying a VPS

I like my VPN service because my network traffic is mixed in with all the other users. Makes it harder to distinguish between my web browsing and their web-browsing.

The other major benefit I get from VPN is the ability to very quickly switch VPN egress points - so I get a new IP address half-way across the planet. That makes it harder to isolate my web usage too, it also is a work-around for geo-blocks on some websites.

I don't think either of those are functions of a VPS.

Well you could use a cloud service to do the second one. The first is harder.

They've obviously flagged them as high risk merchants. Carders use VPNs all the time in their fraud craft, seems natural they would steal the VPNs too.

Big deal VPN providers can accept bitcoin, Okpay, direct deposits, or get around this by selling vouchers and credits for cards on a seperate site.

This is to purchase VPN service. What your saying is equivalent to 7-11 pressuring Visa to stop processing payments with gun shops because guns are used to rob 7-11s.

Let's remove the politicizing and make it a better analogy in any event: It's equivalent to 7-Eleven pressuring Visa to stop processing payments with ski shops because people who rob 7-Eleven stores often wear ski masks.

That's not what he's saying. The criminals using VPNs to defraud people are also paying for those VPNs with stolen credit cards -- go figure, right? Selling VPNs has a high chargeback risk. It's hard to get a merchant account for selling any category of service with a high chargeback risk. They're not singling out VPN providers for any other reason.

is it just me or does this actually sound like a good idea?

I really dislike the combination of the power of Visa/Mastercard and the war against cash.

It is true they are powerful but don't hold out on getting a credit card for too long if you don't have one. They're really useful for building your credit score which will get you a better rate when you apply for a loan when you buy a home or car. This can save you tens of thousands of dollars in the long run. If you're worried about tracking and the ability of people to harvest information on your purchases use them solely for bills and no one will know any better. After maintaining a healthy relationship with your card provider ask for a higher limit, and continue to do so. The more credit available to you at any given time compared to the amount you're using affects your credit score as well. Apply for more cards and use each to pay for a bill. They also have amazing customer protection and will help you if you are ever the victim of fraud. Finally, they can actually get you tickets to things which are sold out from what I understand. Don't quote me on that but I heard that if you really need a ticket to see, say, the NBA finals, and all the tickets are sold out, don't go to craigslist (well try that too, and the scalpers outside I suppose but be careful), try calling your credit card company. It might be a bit more than face, but in a bind, they can help you out. I've never done that, I just graduated from college, but I listened to some financial tapes a while back and this is the advice I heard. I cannot exactly recall the author of the tapes or I would recommend them. Very quality and informative.

I've basically stopped using my credit cards. I am cash only nowadays except for the occasional online purchase, and I am starting to use prepaid debit cards purchased with cash for those too. The straw that broke the camel's back was their move to start using my purchase history against me - i.e. manipulative marketing:

http://online.wsj.com/article/SB1000142405297020400230457662...

I think it is a terrible state of affairs when the only people who can have privacy are those either rich enough to opt out of the mainstream (no mortgage, no car loan, no college loans for the kids, etc) or those willing to live in a state approaching poverty. I'm fortunate enough to be in the former group, but I have a lot more compassion for those in the second group.

I also stopped using credit cards, but for also an second reason. Banks has started to view themselves as service providers with the right to dictate if, how and why I can take out cash. First they limited the number of cash I can withdraw to 2k/week, and secondly, the require an "explanation" every time I transfer money from the account. If the "explanation" I tell the teller is not satisfactory, then they will deny the transaction.*

That the purchase history is not mine is truly a large issue. The banks should not have any right to "listen in" on my transaction and use what ever information they fish out to their business advantage. They should be behaving as the bank of old, which was more of a care holder of assets than anything else.

*All based on banks in Sweden, and to a degree, Swedish banking laws

Can't you transfer electronically without an explanation? I use a Swedish bank in the UK and electronic transfers are fine...

Correct. Not sure why on-line banking behaves different in this aspect than when doing it at the bank.

FYI, that WSJ link doesn't work.

Oh, it's missing the final 'l':

http://online.wsj.com/article/SB1000142405297020400230457662...

Thanks, too late for me to fix it.

You do not need to ever use a credit card to have an excellent credit score. I had a FICO score of 795 when I bought my first house having never used a credit card. These days, most young adults have student loans to establish a credit payment history. If not, simply getting a credit card and leaving it in a drawer still works your "average age of open lines of credit" stat. You don't have to use the credit.

If you're not using a rewards card, you're essentially subsidizing those of us who do. So, thanks!

I recently got dinged for leaving my credit card "in the drawer".

The "credit utilization" component of my rating according to creditkarma.com went from A to C because my utilization was 0% (I pay for everything with my Simple debit card or direct debit). 0% is in the C bucket, while 1-20% is in the A bucket.

I started using it like that. I use it for some of my purchases every month, and have them debit the full balance at the end of each month. My rating in that category went back to A the very next month.

How else am I suppose to get cash to these services?

The VPN in question is owned by Peter Sunde, a co-founder of The Pirate Bay. I think that's a factor in the decision to stop doing business with him...

Good we have Bitcoin then. Unfortunately if this trends continue sellers of Bitcoin will soon be facing blocks to.

It's already very difficult to buy Bitcoin with credit cards. I have no doubt that the credit card people are not happy about BTC trading exchanges.

vpn providers see an enormous amount of fraud.

Yes, this. Card issuers do not enjoy doing business in sectors with high chargeback ratios. It probably isn't personal or political.

But then this is partly a choice on their part. For example, I just received a new Visa PayWave card which lets me pay for anything under $100 just by waving my card over the terminal (no contact, no PIN, nothing). So they are removing just about every form of security from the transaction. The letter that comes with the card is full of assurances that I bear no liability for misuse of the card.

So basically, the card providers are throwing security out the window because they want to increase the rate of legitimate transactions and then wholesale black banning whole segments of the market that have slightly higher risk to counterbalance the increased risk. If they were willing to apply slightly higher security measures they could easily mitigate the risk, but they don't want to because it would decrease the rate of legitimate transactions.

Make cuts with a sharp knife around the chip to sever the NFC antenna. Then confirm it doesn't work at a terminal you trust that you can cancel the transaction on.

With UK credit laws I might be OK with this on a credit card but there was no way I wanted it on my debit card with a direct line to my current account. I only use the debit card for cash and the very occasional purchase (think car purchase once every 5 years or so frequency and inconvenience to pay cash).

Contactless smartcards like you describe are much more fraud resistant than existing skim-friendly magstripes.

They should be accepting bitcoins instead.

Many of them do.

As far as I can tell from the other discussion, that only applies to 1 VPN provider due to their high chargeback rates. You can still purchase VPNs anywhere else.