The card scam causing 'real harm' to businesses

"Businesses across the UK have reported a rise in so-called "friendly fraud", or chargeback scams, where customers tell their credit card companies they haven't made the purchase listed on their statement, but in fact, they have. The customer receives a refund, and the seller is charged the same amount - plus an additional fee for the process. One business owner in London said he was so frustrated by the impact it was having, that he started investigating the fraudulent claims himself."

""People will come in and spend a certain amount of money, and then within a three month period, they've got a window where they can chargeback a payment," Mr Nart explained. The restaurant owner said it often happened after taking credit card payments over the phone. Payments would be fraudulently charged back to the business, with customers denying they made the original purchase. The scam was having a negative impact on business, he said."

""Not only do you have to pay back the money that they spent, but the card provider makes a chargeback fee of 28 plus VAT. "You've provided that customer with the product or the service so you lose out on all ends." He has started to keep every paper receipt, in an effort to investigate each chargeback. "I took it into my own hands and started keeping every food order receipt within a three month period," he said."

Friendly fraud or chargeback scams are increasing across the UK, where customers falsely claim to card issuers they did not make purchases, yet keep goods or services. The cardholder receives a refund while the seller loses the sale and pays an additional chargeback fee. Small food businesses reported such incidents, especially after phone payments. One owner began retaining all paper receipts and matching them to transaction dates to challenge fraudulent claims. Businesses face both refunded revenue and fixed fees, harming margins. UK Finance acknowledges chargebacks' consumer protection role but notes instances of false claims.

Read at www.bbc.com