Chargeback Fraud

What is Chargeback Fraud?

Chargeback fraud occurs when a consumer makes an online purchase and then requests a refund from their bank by claiming the transaction was unauthorized or the goods were never received. Unlike legitimate disputes, this is a deliberate attempt to keep the product while getting the money back.

Why It Matters

• Merchants lose both the sales revenue and the physical inventory associated with the fraudulent claim.

• Excessive chargebacks can lead to heavy fines from banks and the eventual loss of the merchant’s processing account.

• It forces businesses to increase prices for all customers to cover the costs of fraud and dispute management.