Committing Chargeback Fraud is Easy

Sydney VaccaroChargebacks5 Comments

Laptop Fraud

With just a few clicks anyone can dispute a transaction. Money is immediately taken from the merchant and given a time limit as little as 10 days to prove that the customer was legitimate. From the merchant’s perspective many emotions come from receiving a chargeback. Disappointment, anger, panic, and even betrayal can all come from the customer’s actions. Especially if they did not try to resolve the issue with your company first. Some customers have legitimate claims to issue a chargeback, but other times they have more malicious intentions behind the dispute. Fraudsters are able to hide behind the chargeback claim and the issuing bank wants to side with the customer because they would rather keep their customer happy rather than the merchant. This post will explain how easy it is to issue a chargeback and in turn show why is it’s important to take steps to avoid these disputes as much as possible.

Dispute This Purchase

The Right to Chargeback

The right to issue a chargeback was giving the consumers as a part of the Fair Credit Billing Act. This act is a federal law which protects consumers from unfair billing practices. Examples of the billing errors outlined in the act include:

  • Charges not actually made by the cardholder
  • Goods or services were not received or accepted
  • Goods were received damaged or defective
  • A charge that the cardholder wanted additional information or clarification
  • The creditor’s failure to reflect the charge properly on the statement

Report a Problem

These errors can lead to a dispute filed by the customer. Law protecting customers rights aren’t all bad news for merchants. It is because the these protections that customers feel confident making purchases. Especially on ecommerce purchases where there may be no physical location nearby for the customer to resolve an issue with. The Fair Credit Billing Act also has limits for the consumers when they try to dispute a charge. The creditor must receive the written dispute within 60 days and the dispute must be solved within two billing cycles, but no more than 90 days. These limitations protect the merchants from having to deal with a dispute from several months ago or longer and having the dispute process be dragged out beyond 90 days.

This Might be Fraud

So, How Easy Is It?

Let’s put ourselves in the shoes of someone who is about to commit chargeback fraud. We just purchased a shirt from an online merchant and heard how easy is was to “just get money back” from saying that we didn’t actually make the purchase. So we head to our bank’s website to issue the chargeback and here is what we found.

To dispute a charge with Chase Bank the customer will need to provide:

  • Name and account number
  • The dollar amount of the suspected error
  • A detailed description of what is believed to be wrong
  • Why it is believed to be mistake

Bank of America has almost identical requirements to dispute a charge:

  • Your name and account number
  • The dollar amount of the suspected error
  • The posting date of the transaction
  • A description of the error and an explanation of why you believe there is an error

Wells Fargo requires customers to provide:

  • Cardholder Name
  • Account Number
  • Transaction Date
  • Transaction Amount
  • Merchant Name
  • Reason why the charge is being disputed

Why You Need To Take Action

These banks are among the largest in the U.S. and all it takes is providing a few pieces of simple information to issue a chargeback and take the money immediately away from the merchant. Some companies policies are to not fight the chargeback and just take a hit on their bottom line. If merchants do this they will be letting fraudster get away with the company’s product and hard earned money. Don’t let it be that easy for them.

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