ChargeBack Information

Chargeback

Occurs when a consumer (you) reports to their bank/credit card company that a completed transaction is unauthorized and should be reversed. The bank/credit card company complies and the funds are returned.


Reasonable Behavior

Reporting legitimate suspicious transaction activity to your bank/credit card company. This allows the creditor to investigate legitimate claims and remediate the victim’s losses quickly.


Fraudulent Behavior

Chargeback fraud, also known as friendly fraud, occurs when a consumer makes a purchase with their own credit/debit card, and then reports the transaction as unauthorized to their bank/credit card company after receiving the purchased goods, accessing/downloading digital goods (ie e-books, music, images), accessing or completing online courses, or using services, materials, and resources.


Some consumers may engage in chargeback fraud for some of the following reasons:

  1. They intended to receive goods or services for free

  2. They made a legitimate purchase that did not qualify for a traditional refund

  3. A family member or close friend made a legitimate purchase with the card holder’s payment information, then later the card holder does not want to honor the charges

  4. They made a legitimate purchase for someone else to access goods or services, then later the card holder does not want to honor the charges

  5. They made the purchase but later do not recognize the charge or forgot about making the purchase

  6. They experience buyer’s remorse

  7. They justify any reason following the completion of a legitimate transaction


Regardless of the why, chargeback fraud is considered insurance fraud, theft, and larceny; all of which are illegal.


Penalty Fees, Fines, and Prosecution 

Chargeback fraud is not a victimless crime. It hurts everyone: consumers with legitimate claims, exhausts the investigative resources of the creditors, creates excessive false insurance claims, and damages the merchants who trust the integrity of their customers.


Consumers who engage in chargeback fraud also put themselves at risk. They may be charged a penalty fee. These fees can rage from as low as $10 to the high thousands depending on the nature and severity of the fraud. Unpaid fees may also be put into collections and reported on your credit report. Also, they may be subject to legal prosecution and fines.


Protect Yourself & Others

Act ethically and just don’t do it! You are rolling the dice and the outcome may have unintended unfavorable far-reaching consequences for you and others.