Here’s a sobering stat: in 2022, 60% of adults in the U.S. were living paycheck to paycheck.
In these challenging times, with many people feeling the pinch of inflation, credit card usage has become a vital way for millions to make ends meet. Naturally, this uptick in credit card dependence has unfortunately led to a rise in fraud.
A staggering 65% of cardholders have been victims of fraud at some point. In 2022 alone, 44% of credit card users experienced multiple fraudulent charges. That’s an increase of 9% compared to the previous year. The problem has been compounded by the rapid growth of eCommerce in the post-covid era, and a resulting surge in CNP (card-not-present) fraud.
This year, experts are estimating CNP fraud losses to reach a staggering $9.49 billion; a jump of 8.5% from 2022. It’s shocking to think that these losses will account for 73% of all credit card fraud losses.
The Surge in CNP Fraud
We all enjoy the convenience of shopping online. With a few clicks, we can quickly buy just about anything using stored credit card information. This trend is growing, with an additional 80 million people expected to shop online in 2023 compared to 2022.
However, when shopping online, transactions happen in the blink of an eye. And with credit card information so easily available, we all need to stay on our toes. Most banks offer handy alerts that notify you via text or email every time a transaction occurs. Remember, cybercriminals are always looking for loopholes, so it’s crucial to stay one step ahead.
The good news is that consumers do have some recourse in these cases. Consumer protection laws like the Fair Credit Billing Act of 1974 have been designed to shield buyers from fraud and unfair billing.
Under this law, cardholders have the right to dispute any incorrect or fraudulent credit card charges. This is called a chargeback, and it’s a useful tool to get your money back if something goes wrong.
When You Might Need to File a Chargeback
Chargebacks exist to protect consumers. However, unintentional misuse of the chargeback process does occur.
You might forget about a legitimate purchase, or perhaps the merchant’s name on the statement is unfamiliar. There are also cases in which consumers file chargebacks to avoid direct communication with a merchant.
Another concerning trend is friendly fraud. This happens when consumers knowingly file chargebacks for legitimate transactions, even attempting to get refunds from both the merchant and the bank.
Some examples of legitimate reasons to request chargebacks include:
- Illegal purchases made with your stolen card information.
- Delayed or failed delivery of goods or services.
- Receiving damaged or defective items.
- Being billed incorrect amounts by a merchant.
- Experiencing buyer’s remorse.
- Unauthorized purchases by family members.
- Falling victim to scams, like misleading product descriptions.
Outside of these, many chargebacks are actually fraudulent.
The Process & Potential Consequences
Navigating chargebacks isn’t always smooth. Both the consumer and the merchant have responsibilities, and the evidence provided by each party can affect the outcome.
It’s worth noting that the timeframe for filing a chargeback can vary, but usually, you have at least 60 days to dispute a charge. Be aware, though, that the chargeback process can sometimes backfire.
Banks may have made it too easy, leading to unintended abuse of the system. Frequent chargebacks may result in blacklisting or even account closure, which can affect your credit score. Merchants, too, suffer from chargeback costs, and these costs often get passed on to consumers.
As someone who faced the challenge of chargebacks myself, I know the importance of awareness and understanding of this system. AT Chargebacks911, our vision is to provide support, and thereby help everyone take back control.
Collaboration: The Path to Better Solutions
It’s a misconception that only merchants suffer from chargebacks. Consumers and card issuers are also affected.
One report concluded that over 80% of chargebacks could be avoided if customers simply contacted the retailer first. That’s why it’s crucial to foster communication between all parties involved.
Retailers usually want to keep their customers happy, and financial institutions should promote working together before jumping to chargebacks. By keeping open lines of communication, we can reduce the negative impact of chargebacks and build stronger relationships.
Let’s all work together by staying vigilant, improving communication, and examining the root causes. Together, we can fight fraud and create a healthier financial environment for everyone.
