eCommerce Inequality Leading to Chargebacks and Friendly Fraud—Chargeback Fraud Now $40 Billion Annual Loss for Merchants

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Chargebacks911 responds to increasing cases of friendly fraud by encouraging merchants to exercise their rights and fight back against an obstacle that could derail the progress of the eCommerce industry.

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In addition to being hit financially, excessive chargebacks can cause a merchant to forfeit their business account or even the ability to accept payments from Visa and MasterCard; and reputation loss among consumers is also common.

Ecommerce is growing at an astounding rate and presenting an attractive proposition for entrepreneurs looking to capitalize on the booming industry—global business-to-consumer (B2C) eCommerce sales will increase by 20.1 percent this year, to reach $1.5 trillion. (1) But some say that inexperienced merchants are ill-prepared for the challenges that accompany card-not-present, or online, purchases. Chargebacks911, a dispute mitigation and risk management company, maintains that the eCommerce industry has become imbalanced in favor of consumers, many of whom have taken advantage of and contributed to growing cases of chargeback fraud to the tune of $40 billion annually.

Chargebacks were created as a means of financial protection for consumers, but dishonest consumers quickly realized that chargebacks are an easy way to get an item or service for free—a realization which led to a new term to be coined: “friendly fraud.” Friendly fraud occurs when a consumer makes an online purchase with his/her own credit card, and then instigates a chargeback through the card provider after receiving the goods or services, effectively canceling the transaction and receiving a refund of the money (and keeping the merchandise). According to VISA, friendly fraud accounted for an $11.8 billion loss in 2012. (2)

Chargebacks911 co-founder Monica Eaton-Cardone maintains that friendly fraud incidents have continued to rise in subsequent years, and in 2013, financial damage directly caused by credit card fraud exceeded $100 billion, $40 billion of which was directly linked to friendly fraud.

“In the grand scheme of things, eCommerce is a thriving industry, but merchants and their businesses will not be able to sustain the losses caused by friendly fraud in the long-term; that doesn’t bode well for eCommerce, or for the economy as a whole,” said Eaton-Cardone.

When it comes to keeping score between merchants, banks and their consumers, merchants lead with losses in terms of credit card processing—20 times more than consumers, and 10 times more than banks. (3) For merchants—the backbone of the American economy—the process of fighting a friendly fraud chargeback is not only lengthy, but also costly, especially if the case is taken to arbitration, per Eaton-Cardone.

In order to fight a chargeback, merchants must provide documentation proving that they did everything necessary to ensure the identity of a cardholder before processing a charge, and that they delivered the purchased goods or services. But in addition to the time and associated costs it takes to provide that information, there are other costs incurred by the merchant for a lost dispute, such as:

1.    A chargeback fee with costs that can exceed $75.00 per dispute;
2.    Loss of product costs; and
3.    Loss of shipping costs. (4)

But the financial losses are not the only liabilities—there are also potential indirect costs, per Eaton-Cardone.

“In addition to being hit financially, excessive chargebacks can cause a merchant to forfeit their business account or even the ability to accept payments from Visa and MasterCard; and reputation loss among consumers is also common,” said Eaton-Cardone. “Either issue is fatal and can cause a merchant to go out of business.”

Because the time-consuming process of fighting chargebacks can discourage merchants from disputing them altogether—a practice which Eaton-Cardone says inadvertently rewards incidents of chargeback fraud and leads to more chargebacks rather than fewer—Chargebacks911 suggests seeking the help of a chargeback specialist who can help them avoid a significant monetary loss, while also ensuring the viability of their business.

Chargebacks 911 was created by Eaton-Cardone, a former online retailer herself plagued with friendly fraud, in order to provide solutions to merchants’ chargeback issues. After her own trial and error in experiences with chargeback issues, she formed Chargebacks911 to provide fast and reliable services that not only help to recoup the loss of funds as a result of increasing chargebacks, but to also curb future chargebacks so that merchants retain all processing abilities.

Chargebacks911 specializes in servicing merchants and the majority of banking institutions in mitigating chargeback disputes. The company has expanded its gross processing dollars to over $50 million per month for a variety of industries, including cosmetics and skin care, insurance and educational programs, private and public entities, healthcare companies, online dating sites, insurance, retail merchandise, and bid sites.

For more information about Chargebacks911 and its services, visit

About Chargebacks911:

Co-founder Monica Eaton-Cardone established Chargebacks911 in September, 2012, out of necessity after many years as a merchant struggling to find a solution to chargeback issues. Chargebacks911 was developed specifically for merchants to offer immediate aid through proprietary technology and provide the necessary function that gives merchants the freedom to focus on their core competency and optimize their in-house skill set. Chargebacks911 specializes in servicing Internet merchants, and offers both response and resolution services for chargebacks and cardholder disputes. The company works with merchant clients to help them keep their dispute rates down and retain their ability to accept credit cards. Chargebacks911 provides a unique exception to standard dispute processing for dissatisfied consumers who wish to remedy transactional disputes, without the requirement of additional intermediaries or lengthy correspondence requirements. For more information, visit

1.    “Global E-commerce Sales to Hit $1.5 Trillion, Driven by Growth in Emerging Markets.” N.p., 6 Feb. 2014. Web. 15 May 2014.

2.    Harper, Elizabeth. “Friendly Fraud? Yes It Exists.” The Christian Science Monitor, 11 Mar. 2014. Web. 16 May 2014.

3.    “ECommerce Imbalance: Encouraging Increased Chargebacks, Friendly Fraud.” N.p., Apr. 2014. Web. 16 May 2014.

4.    “Credit Card Disputes and You: The True Cost of a Chargeback to a Merchant.” HubPages. N.p., n.d. Web. 16 May 2014.

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