Comment by rvz | Hacker News Reader

Comment by rvz | Hacker News Reader

> A recent study by SIFT found that nearly one in five consumers who have filed a chargeback dispute have committed first party fraud by submitting false claims in order to get their money back on legitimate purchases. In fact, according to the NRF, the losses from friendly fraud totals over $25 billion a year.

Yes, this is a problem and so many merchants are getting their accounts and funds locked up by being unable to fight these friendly fraud disputes that have been taken advantage of by the consumer.

This sort of fraud hurts both the consumer and mostly the merchant as the bank which doesn't know any of the context of the payment takes 3 seconds to see the dispute and 98% of the time, the merchant loses and the bank forcibly takes the money away and gives it back to the customer, especially for digital subscriptions. Instead the consumer should contact the merchant directly to resolve the dispute.

At least VISA knows it is a problem. What is Mastercard doing about this?

> Instead the consumer should contact the merchant directly to resolve the dispute.

Hahaha. Have you tried this recently? I had a company ship us defective baby food with broken seals. They said they couldn’t refund but they were happy to ship us a replacement. When we said we wanted a refund instead, they said “whoops we already shipped it”. It arrived with more broken seals. I issued a chargeback. Got my money instantly.

Some merchants are bad. Visa’s whole value to me is that they insure me against these situations.

Congratulations. You have accidentally proven my point and they won't do business with you again with that chargeback, hence why I have said it hurts both the consumer and the merchant. They will just edit their terms of service policies for refunds and add chargeback protection on top of that and any chargebacks will result in a terminated / banned account.

I have seen many have dared to do this with digital purchases and subscriptions. For instance many have tried to services from Sony, Nintendo, Microsoft, Amazon etc and as soon as the customers got their money back, 99% they were crying and complaining that their accounts got locked and banned immediately and lost all their digital purchases due to that chargeback dispute they filed against them.

As for the merchants using Shopify, PayPal or Stripe, the moment a merchant receives tons of fraudulent chargebacks from consumers, they also start crying here on HN about their accounts and funds getting locked.

So over time, the merchants will edit their refund policies to make sure that it will be even harder to get a refund next time and put in place whatever chargeback protection systems that the payment providers have in place for these merchants hence why it hurts both of them.

Yes, some consumers are bad too. You didn’t engage with my point though. Have you had generally good experiences trying to resolve disputes with merchants directly as a consumer?

When both sides of a marketplace are willing to commit fraud, what can the middleman do? Most likely not much. As long as purchases are not "notarized" or otherwise observed in person by a neutral third party, it is very, very difficult to reliably and fairly police unethical or fraudulent intentions for internet purchases.

Keep the money for themselves. Disincentives fraud, and it's profitable too!

> Instead the consumer should contact the merchant directly to resolve the dispute.

I agree, for the cases where this is reasonable. Unfortunately plenty of companies engage in extremely bad faith efforts to make it absurdly hard to cancel a service or resolve an issue. My concern is that these sorts of companies are the ones that will benefit from this change. An ethical company that makes it easy to understand charges, cancel services, or handle issues probably gets far fewer chargebacks than one that makes cancelling as painful as possible. Visa does have a financial interest in processing more charges, so I wouldn't automatically assume good faith on their part.

>$25 billion a year.

What an amazing number, wonder where that came from ;)

Now let's compare that figure to the amount stolen yearly by unethical merchants :)

Assuming you have read the whole article from the start to the very end, you should have no problem at finding that figure.

Just in case you likely haven't finished reading it, I will give you a hint before you start: Try looking at the 'references' at the bottom. ;)

It's not that hard if you have read it in its entirety rather than directly replying to my comment. :)

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