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The Insanity of the Chargeback

The Insanity of the Chargeback
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Synopsis: The chargeback system and how the left hand of the bank doesn't even know the right hand exists.

These days most of our payments come via PayPal, Google Checkout or some other dedicated on-line payment system. Some people still like to use a credit or debit card though, which is fine, on our site they are transferred to the secure HSBC Epayments site for the actual transactions.

Although it's not such a bad problem as it used to be, sometimes bad people steal card details and try and order things. Over the years we've got very good at spotting this, for obvious reasons I won't go into detail here, but there are several very good indicators of fraud, get two or more of these and it's 99 percent sure.

So, last January an order was placed amounting to £88.93 . Our man Liam spotted it 20 minutes later, figured out it was a fraud, cancelled the order and refunded the money to the card, all through the HSBC Epayments system.

Imagine our confusion in March to see that HSBC Epayments had debited our account  £88.93 as a chargeback. A chargeback is a charge that a merchant has to pay because a card has been fraudulently used on their web site (did you think the bank took the loss?).

It took us a while to locate the transaction, especially as it was over two months previous.

Now, we do not blame the person who's card it was. This American gentleman had no doubt seen a load of fraudulent transactions on his account, panicked and listed them all in his letter to his card issuer. If he had looked more closely he would have seen the money refunded from us, but he probably did panic, something similar once happened to me and it's quite scary.

Then, his card issuer contacted the various different merchant services providers to get the money back.

HSBC Epayments received this chargeback notice and just took the money from us. If we had not noticed this they would have kept the money, or maybe credited the American man twice. However, the point is they knew the transaction had been refunded, it was all done through their system. Instead we had to use their system to get transaction numbers, refund date and time and codes, in order to prove to them that the money had been refunded through their payment system.

An insane system. Still, if being in business was easy, everyone would do it.

Steve



About the Author

Steve Farr Electrical and Electronics blogger for BestStuff.co.uk, Steve also writes much of the copy that appears on the BestStuff web site.

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