Chargebacks

There are three types of Chargebacks:
Friendly Fraud
Friendly Fraud

Friendly fraud occurs when the cardholder initiates a chargeback without malicious intent. This most often occurs when the client forgets about making a purchase or doesn’t recognize a charge on their credit card statement.

Chargeback Fraud
Chargeback Fraud
Chargeback fraud occurs when a cardholder initiates a chargeback with malicious intent. Usually, the goal of the chargeback is regaining the purchase amount and ALSO retaining the received products or rendered services.
True Fraud
True Fraud

True fraud is associated with identity theft and occurs when a fraudster uses stolen card information to complete a transaction. When the cardholder is alerted to the fraudulent transaction, they dispute the purchase. A chargeback that is the result of true fraud CANNOT be won.

Common Chargeback Scenarios:

Scenario 1:
The chargeback is resolved in the business’s favor. In this scenario, the “on hold” funds are returned to the merchant’s bank account.

Scenario 2:
The chargeback is resolved in the cardholder’s favor. In this scenario, the “on hold” funds are returned to the cardholder’s bank account.

For businesses that have received a chargeback, scenario 1 is the ideal resolution, and if your processor is a real partner, their goal should be to help you achieve that resolution as often as possible. Unfortunately, in the event of the second scenario, you not only lose the funds but potentially the rendered products or services as well.

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