Did you know that electronic payment fraud costs merchants millions of dollars every year? What are you doing to protect your profit margins? The minimal expense of adding a fraud protection service to your transactions will easily pay for itself in chargebacks prevented.
The card associations and check processors place the liability on the merchant to ensure that a transaction is legitimate. If a transaction is fraudulent, the merchant will take a loss on (A) the cost of the goods/service provided to the “customer,” (B) the FULL charged-back transaction amount that will be debited out of your checking account, and (C) a chargeback penalty from your processor, usually $25-$30. In addition, if you have more than 1% of your sales resulting in chargebacks (1 out of 100 sales or $1 per $100 in sales), your merchant account can be terminated, potentially forcing you out of business. You may be placed on the TMF list as well, preventing you from acquiring another high-risk merchant account—there are no second chances. As unfair as this may seem, it is the reality a merchant must face when accepting electronic payments. Visa/MC/AmEx/Discover all allow their cardholders 6 months to issue a chargeback, and ACH customers also have 6 months to issue a dispute.
A merchant needs to realize that the rules are in place to protect customers from the fraudulent use of their credit card & checking account, and *NOT* to protect the merchant from fraudulent customers! The merchant must both (A) protect themselves from fraudulent transactions and (B) protect themselves from “friendly fraud.” Friendly fraud is where the customer tries to take advantage of the chargeback protection afforded to them, even when the merchant *did* deliver the product or service to the customer.