Consumer protection in the modern world remains one of the most important issues. The number of unscrupulous sellers is increasing, as well as scammers who illegally lure money from buyers. That is why the chargeback process was developed.

However, the problem is that it’s not an advanced tool as it has flaws. In some cases, unscrupulous buyers use this tool not to protect themselves from fraudsters but, on the contrary, to commit chargeback fraud.

You may have heard about friendly fraud chargebacks many times. This is exactly this type of fraud when people make refunds, not because they did not receive the goods or because the seller did not fulfill the terms of the deal, but because they intend to steal money that is legally due to stores, as well as sellers.

Such people can return insignificant amounts of money or do it quite rarely. However, it is still a scam. As a result of this behavior, a huge number of stores, companies, as well as small sellers suffer.

When Does It Turn Into Criminal Fraud?

Chargeback Fraud

The primary reason for developing such a process was to provide buyers with the right tool to deal with fraudsters. This is due both to illegal credit card transactions as well as to the tricks of unscrupulous sellers.

This gave the buyers the confidence that they could take steps to ensure that they would not lose their money. Thus, buyers are much more willing and confident to buy goods from various stores, companies, as well as sellers online. It especially helped to ensure that people were not afraid to buy from unknown sellers with whom they had not interacted before.

If we talk about fraud on the part of stores or sellers, then everything may not be so clear. Some stores may have significant problems getting goods into their warehouses. Also, there are a ton of other issues that happen, but the seller can’t do anything about it. Thus, buyers can take advantage of this opportunity if the seller does not fulfill his end of the transaction.

On the other hand, some people may abuse this opportunity. Someone can wait until the moment they receive the goods and then charge the store or seller with the fact that the goods were never received. Other people may deliberately take advantage of this opportunity, using various schemes to steal money from sellers. Thus, we conclude that all this turns into criminal fraud.

Deliberate Fraud And Common Misunderstanding

Chargeback Fraud

You may have often heard that many people call chargeback fraud friendly. They will not be wrong, as our society used to call it that. However, there is still a difference between these two concepts.

If we are talking about a friendly chargeback scam, then by such a scam, we mean some kind of confusion or a simple oversight. There is nothing intentional about this. Suppose you saw that a certain amount was deducted from your card, but you have nothing to do with this. Naturally, you will want to contact your bank and also get your money back. Thus, it can be called a friendly chargeback.

If you pursue other goals, that is, to return your funds in any way, then this is called deliberate fraud. A huge number of companies, online stores, as well as sellers suffer from this. This has a particularly negative effect on small businesses, as well as sellers, who are unlikely to get justice.

Consequences For Both Sides

Some scammers who deliberately take advantage of this opportunity use various tactics to make them untraceable. To do this, they come up with non-existent names and also engage in illegal activities outside the country. Thus, tracking them becomes quite challenging. In addition, law enforcement agencies are reluctant to consider such cases. The whole process can take a very long time, and you may not achieve anything.

If law enforcement agencies decide to start the process of considering your case, it will most likely not receive the status of a criminal one. In most cases, such cases are handled by a civil court. However, there are several cases in history when sellers were able to get back large sums that they honestly earned.

As early as 12 years ago, a similar problem became more noticeable when the first online stores began to appear. However, in recent years, this problem has become critical when the e-commerce market began to flourish. In 2020, with so many merchants facing disruptions in their supply chains, both intentional and unintentional refunds have taken a toll on merchants worldwide.

The e-commerce industry will continue to thrive. However, sellers are no longer willing to take big losses due to the dishonesty of some buyers, as well as cybercriminals. Thus, they are desperate to know all about chargeback fraud prevention.

Preventive measures

Preventive measures for chargeback fraud

If we are talking about friendly scams, the first thing sellers need to start with is to improve customer service. Sellers must provide buyers with full information about their return policy. In addition, it is important to inform buyers promptly in case unforeseen problems with the delivery of goods are planned. If buyers know about everything, this will reduce the number of refunds by mistake.

However, such a measure will not help if we are talking about real cybercriminals with evil intentions. They don’t care what company policy you have or how long the goods take to ship. They are only interested in how they can rob you.

Most of these problems are solved after fraud occurs. To defend your case, you should collect all information of communication with the client, as well as information about transactions. Thus, you will be able to present undisputed evidence in court.

In addition, today, there is a huge amount of software for various purposes. You can easily find information on the Internet about software that will allow you to track transactions, as well as quickly identify anything suspicious.


The chargeback process has been designed to protect buyers. However, not only ordinary buyers but also companies, stores, and sellers become victims of cybercriminals.

If buyers are issuing returns due to non-delivery, sellers are encouraged to communicate their return policy clearly and inform buyers of any delays. If we are discussing deliberate fraud, it is important to record any information about transactions and communication with the client. Thus, you will have evidence that you can later present in court.

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