When the lawmakers who wrote the Fair Credit Billing Act of 1974 created the legal mandate for chargebacks, they were thinking about protecting consumers from credit card thieves and dishonest merchants. They probably weren’t anticipating the way the chargeback process itself could become an instrument of fraud.

The truth is that credit card disputes exist to help consumers who are victims of fraud. When consumers leverage that system to take advantage of merchants, however, they are committing what's called credit card dispute fraud.

What is credit card dispute fraud? It is when cardholders claim that legitimate transactions were fraudulent in order to claim free goods and services. When consumers dispute credit card transactions based on false claims, they’re committing fraud—and merchants are the victims. Fraudulent chargebacks are extremely costly to merchants, whether they’re accepting the loss to their revenue or taking the time to fight them. What can merchants do to protect themselves from credit card dispute fraud?

Full Text:
https://www.chargebackgurus.com/blog/credit-card-dispute-fraud-prevention

©Chargeback Gurus 2021
Production: Emily Woodward
Narration: Sarah Rife