The Top 4 Reasons For Fraudulent Chargebacks

Chargebacks are not an uncommon occurrence for businesses that have high volume sales

. Even the smaller businesses will run into a chargeback every once in a while. The big thing about chargebacks is that the customers may not always be innocent in the transactions. Fraudulent chargebacks can be a real issue for businesses as their customers cheat them out of their goods and services and can even destroy a business.

Customer Complaints

One of the reasons why chargeback fraud is prevalent is the fact that customers can complain about almost anything. The top complaints are "item not received" or "item significantly different than described". The credit company then provides a refund in the form of a chargeback because the customer did not receive what they were promised. This is definitely a chargeback scam and far too many companies fall prey to customers that dislike paying for products and services.

Unauthorized Transaction

The unauthorized transaction claim is also one of the things that have been going on for some time. Most people who buy something may at some point decide that they want their money back but they want to keep the item or service that they have purchased. They can call up their credit card company and say that their child or other capable person made a purchase without the permission of the card holder. The business will receive a notice that the transaction was made without the permission of the card holder. The fraudulent chargeback is then processed even though the purchaser never had a child or they live alone.

Large Quantity Product Purchases

Sometimes there is a customer which will "accidentally" buy too many of the same product. A customer may buy several cameras for example, of the same model. They are very high end cameras and they are all delivered without incident quickly and efficiently. The credit card company will then receive a call from the customer saying that they noticed their bill was many times over the cost of their single item.

The credit company then processes the fraudulent chargeback for the entire order. Not only will the fraudster get to get their money back but they now have cameras that they are not required to send back. Essentially, they got free goods at the expense of the company.

Banks Favor Account Holders

Merchant chargeback protection is very difficult because of the fact that banks favor account holders. Any person with an account at a bank that provides debit or credit card options will generally have specialized policies that allow chargebacks for free or at a small price. In order for a chargeback to work the value of the item(s) must not exceed a certain threshold set by the creditor. Unfortunately some creditors do not care about the cost as much as whether or not their account holding customer is being satisfied. This leads them to favor their own customers even where there is substantial evidence that it was not the company's fault. This is really a form of abuse to the companies while the customer gets to get away with fraud.

by: Gen Wright

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