Merchants fighting back against online shoplifting

Merchants fighting back against online shoplifting


6 On Your Side Consumer Investigator

KNOXVILLE (WATE) - Chargebacks on credit cards are in place to protect consumers who need to dispute a charge that is not legitimate, but recently too many people have been abusing this security measure.

Jennifer from Knoxville asks, "I have recently heard the phrase "online shoplifter." What does it mean?"

Those within the banking and e-commerce industries have coined the phrase "friendly-fraud," a term for online shoplifters who take advantage of disputing a charge for their own financial gain. These false disputes cost retailers nearly 12 billion dollars in 2012, according to E-commerce Services.

Chargebacks were originally put in place to protect you and me from unethical merchants and online fraud. If a cardholder called to complain about a charge they did not make, it is canceled by the bank and the merchant is left paying the bill.

However, too many people are committing "friendly fraud." Some are purely accidental mistakes, such as you forgot having made a purchase and report it as fraudulent.

However, friendly fraud chargebacks are becoming acts of intentional theft made easy by the fraud protection guarantees of most banks.

E-commerce Services reports that many merchants are now beginning to fight back by contesting chargeback claims if their records show a pattern from any one customer.

Cardholders who engage in friendly-fraud too many times could find themselves at risk of being labeled an "online shoplifter" and face penalties associated with filing falsified chargebacks.

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