Credit Card Fraudulent Chargebacks

Chargebacks are a consumer protection procedure but credit card Companies policies about how they resolve chargebacks are outdated, and in some cases outright absurd. Let’s say you ship items to a buyer who initiates a chargeback and you can prove he or she received the items and other personal information to confirm their chargeback claim as fraudulent. But you lose the dispute.

Auctioneers beware.  If you sell items online there is a large group of people that make their living defrauding auction companies and other unwary sellers. They target many items but their preferred items are gold and silver coins and jewelry.

Case in Point:  A bidder registering as a bidder from Texas bids on and wins over $1,900.00 worth of gold coins. The price and shipping are paid for by credit card and you have the buyers address, phone, email and email communication. The bidder initiates a chargeback and the credit card merchant reverses the payment based on “Someone unauthorized used my card.” That’s all it takes.  And you can prove that the gold was delivered to the address of the bidder, which has been confirmed to be the bidder’s home by public records and not returned.  But you still lose the dispute.

Several things that may help.

  1. Do not ship gold, silver or other similar valuables.
  2. Help fight credit card merchants that refuse to reverse a clearly fraudulent chargeback.
  3. Confirm the bidder’s delivery address from public records before you ship.  This can be done online free.
  4. Email the bidder and ask the bidder to reply by email before you ship confirming the bidders address, phone, email, that the bidder purchased the item(s) and understands all items are sold “as-is”. You can also request other information such as a copy of driver’s license and other identification.  If you do not receive an acceptable reply within the time you specify, cancel the sale and advise the bidder.  Make sure you add to your terms and conditions that this will be allowed.
  5. Email the bidder and a attach a form for the bidder to sign containing the items purchase and place for the bidder to fill in personal information and sign.  Again, if no reply cancel the sale.
  6. Together you can call the number and tell then bidder you need to confirm the bidder is the one who purchased and ask for confirmation of personal information you know.
  7. Hire a company to address any chargebacks.
  8. And others.


Keep in mind that there are many methods available for you to obtain and confirm personal information such as name, address, phone, relatives, etc.

Actual Fraud.  If a card was stolen and used with shipment to the fraudulent person’s address the way these people are treated needs to be changed. Criminal charges, denying these people the right to obtain any credit cards, and other things we need to think of to reduce actual fraud.