Chargeback Prevention

Tales from the Chargeback Crypt (Volume III)

halloween chargebacks

The spookiest season of the year has arrived, and while 2020 has given us more than its fair share of frights already, Halloween just wouldn't be the same without sharing a few scary tales of the weird and macabre. We don't want merchants to be scared of chargebacks—with the right methods, most of them can be avoided or beaten.

Every so often, however, merchants come to us with truly hair-raising disputes. The time has come again to unearth these malevolent chargebacks and tell how we dealt with them. Do you dare read on for another series of bone-chilling tales from the chargeback crypt?

Grab some candy and a flashlight and come see the demonic disputes we've had to face this year...

All That Glitters is Not Disputed Gold

New call-to-actionOf all the precious metals, there's something about gold that makes people lose their senses. Consider the story of the customer who placed an order by mail to buy $3,000 in gold coins from a jewelry merchant. The merchant processed the card number and shipped the order to the customer's shipping address—which was not the same as their billing address.

Soon afterwards, the merchant woke up to a $3,000 chargeback after the customer claimed that their card was stolen and the coins had been shipped to a fake address. In researching the claim to see if the chargeback could be represented, we made a shocking discovery: the shipping address wasn't fake at all, it was the customer's office building. Providing the issuing bank with signed proof of delivery put an end to this fraudster's gilded deception.

The Haunting of the House Appraisal

A homeowner hired a company to get an appraisal for his home. The company accepted his request and sent an appraiser to investigate the house, take photographs, and provide a report to the homeowner.

Later, the homeowner disputed the appraiser's $450 charge, insisting that he had never asked for an appraisal, and that somebody must have stolen his card. And yet, the appraisal existed, describing a dilapidated house badly in need of repairs. Had the planes of reality somehow become entangled, causing the homeowner to receive an appraisal for a haunted version of his house that existed in another dimension?

As it turned out, the appraisal was entirely accurate—the house was in poor condition and the homeowner was unhappy that the appraisal accurately reflected that fact. His story quickly unraveled once the appraiser produced records of their correspondence.

The Rime of the Divorced Cruise-Goer

The oceans can be unforgiving, and many a seafarer has come back from a long voyage with frightful tales of ghost ships, unexplainable monsters of the deep—and cheating spouses. This is the story of a woman who took her entire family of eight on a $2,800 cruise with all the amenities: spa, food and drinks, tourist excursions.

Download the eGuide, 4 Reasons to Hire a Chargeback Management CompanyWhen she found out that her husband had been unfaithful to her during the cruise, there were two things she did upon returning to land: file for divorce and file a chargeback for the entire cruise, claiming that her card had been stolen and she hadn't noticed for two whole weeks.

Heartbreak is no excuse for friendly fraud, though. The cruise line was able to provide ample evidence that the woman had knowingly booked and boarded the cruise, and this chargeback was sent back to Davy Jones' locker.

The EMV Gremlins

The earliest gremlin sightings date back to World War II, when these mischievous creatures were blamed for sabotaging aircraft parts and causing otherwise inexplicable breakdowns. Some say that gremlins have kept pace with modern technology—could they be to blame when merchants' EMV chip readers suddenly stop working?

We recall the story of a merchant who sold a $300 gift card to a customer who claimed that their EMV terminal was giving them errors. The merchant let them pay by swiping the card's magnetic stripe. Not long after walking out the door with their gift card, the customer filed a dispute by claiming that their card was stolen.

This story has a sad ending for the merchant: due to the shift in EMV liability, they were 100% responsible for this chargeback. Whether terminal errors are caused by gremlins or more mundane issues, it's very risky for merchants to accept magstripe payments from EMV-equipped cards.

The Last Temptation of the Tire Center

Many a merchant has been led astray by a purchase that seems too good to be true. In their rush to finalize these unlikely orders, merchants overlook the warning signs of fraud. Even experienced merchants can fall victims to these classic scams, like a tire center we recently worked with.

They received a bulk order over the phone for $25,000 worth of tires to be shipped to the customer's supposed client, a major shipping company. To expedite the shipping, they offer to send a separate payment. Excited to close such a large sale, the tire center accepted the card payment over the phone and got to work shipping the order immediately.

Needless to say, the entire order was hit with a chargeback, and because the merchant had processed the card over the phone, they were unable to use the authentication tools that might have helped them fight the chargeback. With insufficient documentary evidence on their side, the merchant lost both the tires and the profit they would have made.


At the end of the day, what's scariest about individual chargebacks is the lengths some fraudsters will go to cheat honest merchants and cardholders. If anything should scare merchants, it's the dangers of letting chargebacks go unchecked and uncontested for too long—the rising chargeback ratio and deductions from your revenue can do serious harm to your business.

Like ghosts and goblins, chargebacks thrive in the darkness. When you analyze your chargeback data and understand where they're coming from and why they're happening, you can shine a light on their root causes and see what changes you need to make to your business operations in order to cast them out.

Thanks for following the Chargeback Gurus blog. Feel free to submit topic suggestions, questions or requests for advice to:

Fight & Recover Chargebacks - Get The Guide