Comment by mhp | Hacker News Reader

Comment by mhp | Hacker News Reader

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Updated: Apologies, I see now that the original comment specifically states there are no victims, period... even merchant victims.

Incorrect. There are no serious consequences for the victims of credit card fraud (unless you consider the victims to be the merchants).

When fraud takes place, the credit card company removes the bill from your statement. Then they take the money back that they sent to the merchant. The merchant is left holding the bag. Whatever they sold is now gone, and they have no money to cover the cost of that good. The merchants bear the entire risk of credit card fraud.

This is why it makes no sense that credit card companies even threaten to charge merchants higher rates if they have more fraud. Merchants with high chargebacks get beaten down in multiple ways. First there's a chargeback fee. Then they raise your processing rates. AND you still lose out on your goods that were stolen.

(Technically I suppose if the fraud is big enough, the merchant could be insolvent in which case the credit card companies bear the burden, but this is certainly an exception).

That's if the cardholder discovers the charge and if it hasn't already caused any problems (such as leading to bounced checks or inability to make an important payment). Your language is much to strong, especially since is wrong.

How can credit card fraud lead to bounced checks?

When the credit card is a check card (directly debits a checking account), and the fraudulent purchases leave insufficient funds to clear your outstanding checks.

If you have overdraft protection that goes to a card, and the card hits its limit, you can bounce a check.

He was very explicit in saying, multiple times, that his assertion was true for any definition of victim. It's easy to show that the victim of credit card fraud is typically the merchant, not the consumer.

I used the term consequences deliberately. The merchant may have losses, but they have no leverage. The option to not take credit cards is not available to most sellers of goods. On a large scale the cost of fraud simply becomes a cost of business that factors into the price the consumer pays. This is why many merchants offer a cash discount. To argue that the cash discount is just to cover credit card processing fees misses the point.

You may have used the word deliberately but you used it wholly incorrectly, which is the source of all the confused replies. Not being able to avoid consequences is not the same as there being no consequences.

Merchants think little or noting about chargebacks when contemplating a cash discount.

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