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Credit card charge backs

Have any of you merchants had any problems with credit card charge
backs to your account due to fraud?

We are currently going through one right now for a jewelry item that
was order and confirmed delivered in November. The processing bank
is now telling us that we have a good chance of losing this case.
Because even though we made sure that the credit card processed had
address and CVC security code verification, that because the ship to
address did not match the billing address on the credit card that we
are at fault and we could and most likely will be, out the money.
The credit card companies seem to do everything in favor of the
customer and forget all about the merchant! They could care less if
we are being ripped of with fraudulent transactions. We have now
changed our ordering rules so that all orders must be shipped to the
billing address only and all deliveries now require signature
confirmation. The bank told us that this is good but that even with
all of these measures in place that this still doesn’t guarantee
that we still can’t be cheated out of our money, not just by the
customer but by the credit card companies as far as I am concerned.
The card holder just has to make a phone call to the credit card
company with some bogus story( no proof, no documentation, nothing)
and we, the merchants are out the money. There needs to be more
support for the merchants! I was told to go to the MasterCard
website and read all of the "great they have on there
for merchants to protect themselves. All I can tell you is there
isn’t any "great for merchants, all they tell you is,
use address and CVC code verification settings. They fit all of this
"great in about two paragraphs on one page, they don’t
even have a contact number or email address for merchant concerns.

If I lose this case my next step is going to go to the post office
and ask to speak to a postal inspector as this package was shipped
through the USPS, priority mail with delivery confirmation. I am
hoping that being that this item was shipped through the USPS it
will constitute “mail fraud” and maybe we can recover our money or
the item this way.

I am wondering if any of you have gone through this same process and
what procedures you used and what results you had. And I want to
warn everyone of you merchants out there that the credit card
companies could care less about you as a merchant. Make sure that
you do address and CVC verification and only ship to the credit card
billing address, with signature confirmation! As this is the best
that you are going to be able to do to protect yourselves as a


Linda & Ron " The Best Cut Gems Team"

Ron McMurray
Best Cut Gems

The USPS did their part correctly.

You lose. This is the way merchant banks operate.

And if you’re dealing with someone you don’t personally know, you
have to check billing address and mailing address.

If any question arises you can call your merchant bank to verify.

I note that you didn’t provide info about the other side of this

It hurts, but that’s the way it is. Calling a lawyer will not help.


I am hoping that being that this item was shipped through the USPS
it will constitute "mail fraud" and maybe we can recover our money
or the item this way. 

Good luck on this one. Don’t know how much you’ve lost here but
remember that if you spend $1000 worth of your time on it and the
loss was $500 you’re out even more money. If you chose the shipping
means it’s highly unlikely the PO will do anything (or can do

And yes the credit card companies couldn’t care less about you as a
merchant. While we pay their salaries, they are geared towards the
customers only, as they feel that the merchant benefits from a
customer being able to use a credit card with them. Most importantly,
if you are an online merchant, or you regularly ship pieces out of
state to customers, you simply have to boost your prices enough to
cover the losses you are going to run into because you ARE going to
run into these losses, and as the criminals keep getting more and
more sophisticated you’ll run into more and more of them. Trust me on
this one, all major companies factor in losses like this (or from
shoplifting), into their pricing. If you don’t also, then you’ll be
the one who gets screwed. So think about adding 1-2% to all of your
prices. If you never lose another piece then you made a little extra
money. If you do, then you’ve covered yourself in the long run.

Daniel R. Spirer, G.G.
Daniel R. Spirer Jewelers, LLC
1780 Massachusetts Ave.
Cambridge, MA 02140


The tone of your post suggests that you are blaming the card holder
for your defraudment - as someone who has just been the victim of
’identity theft’ I can tell you that the card holder is probably more
traumatised than you!!

Fortunately I was alerted to the problem early by a letter I got
from a company asking me to provide 'additional security
as an order they had was not to be shipped to the address relating to
my card. I rang the company and discovered that I had apparently
ordered 400UKP worth of shirts to be delivered to an address in the
south of our country - I sorted that out and looked at my on-line
bank statement only to find that I had apparently also ordered 800UKP
worth of goods or services from a mobile phone provider and 700UKP
worth of goods from Tesco direct supermarket!! That was about 5 weeks
ago and, whilst I obviously hot-footed it down to the bank to get my
cards stopped and replaced, I have only just got the first of the
charge backs into my account - in the meantime I have had all the
hassle of sorting out the standing orders which relate to my cards
and advising those organisations of the number changes and worrying
about possible interest charges etc… The bank did have a laptop
stolen 6 months or so ago which may just have had my details on it
but the only other times I used the card in question in the month or
so before it was used in this fraud were to pay bills to two
government organisations…

So, the fraud you have suffered is most probably not the fault of
the card owner.

One thing which surprised me was the apparent lack of interest of
the bank or the police in the details of my predicament - I had
assumed, naively, that someone might be interested in following up
the various ‘clues’ from the delivery addresses which must have been
given and at which someone must have been present to take delivery
when the various goods were ordered and I attempted to give both the
bank and the police (who weren’t interested in the case at all)
copies of the letter I had received from the shirt company but
neither were interested. I was simply told that the case would be
looked at by the bank’s ‘fraud squad’ and that they would get in
touch with me if they needed any more - they didn’t…

In this case I think that the shirt company did exactly the right
thing in writing to the address relating to the card and asking for
more confirmation of identity before processing the order and not
just going ahead and delivering to an unrelated address as the other
two companies obviously did - maybe you could adopt this strategy in
future similar cases?

Best wishes,
Ian W. Wright
Sheffield UK

I’m still involved in one right now! The weird thing is that it is
through Paypal. The receipient of the jewelry didn’t recognized the
name on the credit card and called the company to ask about it
(AMEX); she was worried because someone had charged a room in
another state to the same card. When I got the notice, I immediately
wrote her. She apologized and said that there was no problem.

She is the friend of a good customer; I really doubt that she is
involved in fraud. But the card company has taken over. I’ve now had
the money taken away from my account, charged $10.00 for Paypal
having to do that and am still awaiting the outcome. I sent the
e-mails she sent me to Paypal - and I have verified tracking and
proof that she received the jewelry (I made the label through
Paypal). Talk about frustrating. I’ve had to write her again and ask
her to call AMEX again and call them off (and I hate to do this to
someone who I believe is honest and would be a good customer).

I’ll let you know what happens - she bought the jewelry the first of
November and it’s been at least 2 months since the chargeback. Scary
that someone can get jewelry through the mail, then charge back and
voila, money and jewelry - all gone!

Donna - Cluny

Linda and Ron,

I know EXACTLY what you’re going through!

I manage a hotel and about 95% of our guests pay with credit/debit
cards. On occasion, we get a “Retrieval Request” which means the
cardholder has disputed the charge for X reasons.

For a disputed stay where the guest DID actually stay in the hotel -
Once we receive the RR, we make copies of ALL documentation…the
reservation (unless they were a walk-in), the signed registration
folio, the signed final bill, and the actual credit card slip. THEN,
we type up a letter of explanation. All this is faxed to the
bank/processor. We prevail almost 100% of the time because we can
PROVE they stayed with us and agreed to the charges.

For a disputed “guaranteed no show” reservation received via our
franchise or the internet - Basically the same procedure, except
there is only the hard-copy reservation, unsigned final bill, and
unsigned credit card slip. As you might imagine, most disputes over a
Guaranteed No Show result in a chargeback.

I agree with you 100% about how they find for the cardholder most of
the time. I was actually told by an “upper management” employee of
one of the major credit card processors we’ve used in the past (and
there have been at least 8 - 10 in the 13 years I’ve been at this
hotel) that they almost always find in the favor of the cardholder
and it was up to us, the merchant, to “negotiate payment” directly
with the cardholder (which is, of course, the most ridiculous thing
I’ve ever heard!).

Basically, “SELLER BEWARE” is pretty much dead on. Even if you, as
the merchant, follow ALL the rules, if the cardholder says “I
cancelled that reservation” or “someone else must have used my

Now, did YOUR customer order this item online and input the delivery
address during checkout? Just about every website I order from has
"bill to" and “ship to” fields. If so, you “may” have a chance. If
not, sadly, your chances of winning are slim to none.


Dear Ron

Please take a deep breath and don’t let this drive you nuts…it
was a learning experiance. I have done over 200 of the craftshows and
had just about every scam tried on me at one time or another. expired
cards, people who say the ‘remember’ their number, ‘can you drop ship
to my friend’ story, and of course the old "i did’nt order that"

I have to agree with you, the card companys tend to side with the
consumer and not the merchant. we as merchants have to have proof
that we sold to the actual card holder. If the transaction is a
swipe, point of purchas sale, then it is automaticaly approved right.
the customer simply walks away with the piece.

What about mobile merchants or phone orders. first of all I have
found that MY merchant server has 2 rates the swipe rate (at about
1.6%) and the non-swipe rate, (about 2.8%) this is off the top of my
head but it is about right. of course the non-swipe rate is higher
because that is where most of the fraud occurs. I call my merchnt
server every once and a while and tell them I am shopping rates…i
have had my non swipe rates lowered twice due to the fact that I have
a pretty good track record for not getting riped off. did they call
me and tell me that, no.

I also found out something interesting. when I do a sale at a show
where there is no phone line avaliable.and I take a card, I call it
in on my cell phone and get an approval code. this tells me the card
has not been reported stolen…but it also gets me a rate that is
lower than the non-swipe rate, as long as I go to a phoneline and
ring it in within 24 hours. I do get the V code from the back and ask
that the address they give me is there billing address. all of that
really does not matter because I got the approval code.

If I am back in my studio and the phone rings and someone wants to
place an order. I do the old non-swipe routine, get the V code and
the billing address of the card. my trans 420 actually asks for the
zipcode. I notice that when I get gas with my card some of the gas
stations do the same thing. I only ship to the customers billing
address. If I do not trust them for some reason, I simply call
and ask for the address of that person. not
only has the number but also the address. I know this is not the best
way, but it has worked for me. if the piece is over $1000 i send it
registered insured, return reciept requested. I have never had a
problem with this. if I sent it to another address I really do not
know if I am protected.

However recently I oredered a high end microphone and some recording
equiptment from a store in central New York. I needed it drop
shipped to my girlfriends house in central Mass. the company took my
card and did an address verification on me and her befor it was
shipped. I just went and got my receipt from the company. it has my
approval code and also something that I have never seen befor. it
GOOGLE.SHIPPING TO GF. I have no idea what the GF stands
for…although it may stand for girl friend???.

I hope this helps you. Keep in mind that if you get too many charge
backs the card compays can drop you. in this day and age we have to
put up with the BS that they put us through. I would hate not to be
able to take credit cards.

One of the worst things about Charge backs to me is the fee.

Even if I prevailed with my old system, there was still a fee to me
because it happened.

So if I sold a $50 piece and had a $39 charge back fee it doesn’t
really matter that I “won”. I still end up in the hole because the
customer got confused about a purchase she made.

Does anyone know how long people can request a chargeback? I have
only been saved because I still had their signature on the credit
card slip and hadn’t shredded it yet.

Karen (in Chicago where everyone is happy because we made it into
the double digits today.)

One thing which surprised me was the apparent lack of interest of
the bank or the police in the details of my predicament - I had
assumed, naively, that someone might be interested in following up 

It just seems so simple, doesn’t it? Here in the States there’s been
some story about 25,000,000 credit card numbers stolen, mostly from
laptops, about once a month. Now, it doesn’t take a genius to know
that nobody has any reason to carry a million credit card numbers
around. And it doesn’t take a genius to know that if a person does
that, they should have at least enough training to not leave it in
their car when they go into Starbucks, but apparently they don’t -
happens every once in a while. There are things in this world that
just make you slap your head in astonishment, and that’s one of them.
I know someone who works in a National Security environment, and they
also have a website open to anyone. He told me that they have hackers
constantly trying to break through into sensitive areas. What they
don’t realize is that sensitive data must be physically moved from
one place to another - the web site is not connected at all. Simple,
effective, brainless, painless - what is it financial institutions
are missing, besides a few screws? “You’ve been robbed, it’s because
our security is run by retarded people, so what, tough luck.”?

Ian and Ron - I also have been a victim of identity theft, actually
several times. Discover Card is wonderful - twice they have called
me with charges that didn’t fit the “pattern” of my usual purchases -
both were in fact fraud.

The other time my dh and I both had our identities stolen by an
insurance company. I filed a report with the company, who didn’t
give a rip, and with our sheriff’s department, which took a report
but then I never heard anything else. I think the officials really
don’t know what to do with this sort of case yet. They know it is
illegal, someone has broken the law, but they really don’t know how
to handle the case with no bleeding victim!

I think Ian’s suggestion of writing to the billing address and
receiving confirmation before shipping to a non-billing address is
probably a good one, although too late for Ron.

Good luck to both of you sorting your separate problems out. It is a
major hassle!

Beth in SC

I'm still involved in one right now! The weird thing is that it is
through Paypal. 

That’s not so weird. There are whole websites devoted to sellers
who’ve had problems with Paypal. One is Heck, just
read the Paypal discussion board on Ebay. (Ebay owns Paypal) You’ll
see that Paypal always believes the buyer, freezes your account, and
then takes their sweet time investigating it.

Smart Ebay sellers have taken to only keeping a minimal amount of
money in their account linked to Paypal, transferring money out of it
as soon as it’s deposited, so they can’t freeze a large amount and
wreak havoc with their business.


We have received the answer from our processing bank, we have been
denied a reversal by the issuing bank. I emailed them back and
informed them that I what the phone number of the issuing bank. If
the card holder has the right to state their case to the issuing
bank then I as the merchant should have the same right! I don’t know
if they will give it to me or not, but I am not done fighting on
this. The processing bank doesn’t care about the merchant either, as
we are just a number to them! The credit cards companies all what us
to accept their cards and tell us how great it is that we are
accepting their credit cards, but the only reason that it is good
that we are doing business with them is, that we are making them
money. The credit card companies make all of the money, set all the
rules and accept none of the liability! The credit card companies
don’t even offer contact for merchants to be able to
talk to or even email them, it is like they are God or something.

We have changed our ordering rules to only ship to the credit card
billing address and we only ship with signature confirmation on
delivery now. This is the best that we can do to protect ourselves
other than quit accepting credit card sales all together. Maybe if
enough merchants stood up and raised a ruckus with the credit card
companies, even before they have been taken to the cleaners by them,
then maybe we might get better service from them. I guess we are
going to have to take Daniel’s advice and raise our prices to cover
this and future losses. It is unfortunate that honest people have to
pay for the crimes of others!

I just hope that the rest of you merchants out there will be able to
learn from our misfortune and change your ordering rules as well.


Linda & Ron " The Best Cut Gems Team"

Best Cut Gems


I totally sympathize and agree with you.

There is absolutely no protection for the merchant. In fact, we were
told by a payment gateway service provider that maximum cases of
online fraud occur where jewelry is involved. We replied that we
would ship only to the address registered with a buyer’s credit card
company. However, a buyer can always claim that they received an
empty package. Therefore, unless the courier’s delivery person signs
a statement that says that the package contains the mentioned items,
delivers only to the address registered with the credit card company,
takes a signature from the consignee at the time of delivery after
the latter verifies the contents of the package, there is no
protection for the merchant. In case of a chargeback, the couriers
would be held responsible and one would have to enter into an
agreement that says something to this effect.

Rasesh Chasmawala.

Smart Ebay sellers have taken to only keeping a minimal amount of
money in their account linked to Paypal, transferring money out of
it as soon as it's deposited, so they can't freeze a large amount
and wreak havoc with their business. 

PayPal is also not FDIC insured so they can make up the rules as the
go along and your money could go poof and you would have no recourse
but to take legal action. I don’t keep anything in my PayPal account
that I can’t afford to lose. But it’s a necessary evil if you want to
do business on eBay.

It kinda reminds me of some sage advice my dad once gave me, “Don’t
take money to a poker game that you can’t afford to lose.”

Rick Copeland
Silversmith and Lapidary Artisan
Rocky Mountain Wonders
Colorado Springs, Colorado

Does anyone know how long people can request a chargeback? 

There are different time limits depending on the reason for the
chargeback (e.g., reason being the customer claimed fraudlent use of
his/her card or reason being merchant’s nondelivery of goods). You
would have to go to your specific merchant account to find out the

One other thing I have to offer this discussion is
It’s a reputable site with knowledgeable people who care about
getting a fair shake for merchants. One needs to register but it is a
free service.

You might also find that there are different rates for credit cards
vs debit cards…

Might want to check it out.

Does anyone know how long people can request a chargeback? I have
only been saved because I still had their signature on the credit
card slip and hadn't shredded it yet. 

We’ve had chargebacks as far back as 6 months…but not many.

We keep our customer receipts for 5 years and then have them
shredded. There have been a few times that those old receipts
(attached to registrations) have came in handy…especially when the
Feds show up asking for them to prove their suspect was in town on X
date 3 or 4 years ago.

Oh yes, I could tell you stories…


Another option is to ship only to an address that is on file with the
credit card company. Did you know ypu can add shipping addresses to
your credit card? I have had to do this several times when purchasing
computer parts. Since my billing address is a PO Box, I am out of
luck if I want to purchase online and ship UPS - as most vendors

Bob J

Another option is to ship only to an address that is on file with
the credit card company. Did you know ypu can add shipping addresses
to your credit card? I have had to do this several times when
purchasing computer parts 

You shouldn’t be ‘out of luck’. I’m in the same situation. I give the
vendor both the billing address and the shipping address. I’ve not
had a problem.


No matter how one takes payment there will always be an element of
risk, particularly when you don’t have a relationship with the

I’m assuming in this case this was an internet sale. On the flip
side consider how much volume you are doing because of the internet.
Sounds like this may have been your first experience with a loss of
this type. That’s not so bad really, unless its a whopper. So take
this event as a wake up call to tighten procedures. The credit card
company is not out to cheat you.If the cardholder doesn’t pay the
company doesn’t get paid. The cardholder is their client and its up
to the merchant to prove a legitimate sale to their specs. The peace
of mind ( the ability of a cardholder to dispute a charge) the
public has results in more sales generally so you have a
counterbalance to the losses (higher sales).

Even though it must burn your cookies to take a loss sometimes, it
is unfortunately the cost of doing business. Try to minimize it as
best you can but remember risk is inherent in business.

But oddly enough a few weeks ago on NPR they were talking about
chargebacks and the gist of it was the companies don’t favor the