The chargeback process helps cardholders recover lost funds in Springfield, Missouri. Cardholders who fall victim to fraud or abuse can use the chargeback process, but consumers can abuse the process. A chargeback process is a helpful tool for payment disputes, but are there consequences for submitting false claims?

The litigation-based dispute process

A litigation-based process resolves chargebacks. The chargeback process starts when a person files a claim with the bank that issues their card. Fraud claims are when a criminal uses a card without permission. Merchants may also make false promises about goods or services. The bank will examine the cardholder’s claim before issuing a chargeback to undo the transaction. Merchants can use the process to fight back against a chargeback claim. The merchant can gather evidence and resubmit the transaction to the bank. Banks will examine all evidence before making a final decision.

Chargeback

Chargebacks help victims of fraud when working as intended, but unfortunately, abuse is more common. The issuing bank makes decisions on fraud claims but has an incentive to keep its customers happy. The burden of proof is on the merchant because merchants are guilty until proven innocent. White-collar crime is common because cardholders don’t have to show evidence. The chargeback process creates an environment that encourages consumers to file false credit card dispute cases. Friendly fraud describes situations where cardholders file chargeback claims without justification.

Consumer consequences for friendly fraud

There are consequences for merchants, consumers and banks after filing friendly fraud. It’s rare for consumers to go to jail for friendly fraud. Merchants could blacklist consumers after filing a dispute for fear of compromised accounts. People may file a chargeback claim instead of going through the proper channels to return an item. If a consumer commits friendly fraud, a bank may see them as more of a liability rather than a victim. Cardholders’ credit scores will drop after friendly fraud claims.

The number of consumers that file friendly fraud claims in a chargeback is small. Many people don’t understand when they’re entitled to the chargeback process. Consumers don’t always know the consequences of filing false chargebacks. Most laws leave the decision up to the banks.