Chargebacks in the Financial World 2021

Chargebacks are a hard reality in the world of finance management. The legal right for people to reclaim misused funds is highly beneficial to companies. Chargebacks are conducted by individual victims, in-house finance managers, or third-party services. Banks and most businesses have protocols in place to initiate chargeback claims on fraudulent investment scams. 

In the U.S.A., several laws protect investors from fraud. For example, Regulation Z within The Truth in Lending Act covers credit cards. Alternatively, Regulation E in The Electronic Fund Transfer Act covers debit cards and provides guaranteed rights to receive money back on a debit purchase. 

With the development of cyber scamming over recent years, a majority of merchants are involved with chargeback claims. The chargebacks occur in all types of industries–from grocery stores to restaurants and travel companies. Additionally, people initiate chargeback claims for several reasons. 

How Do I Begin a Chargeback? 

In the midst of a scam, it’s difficult to be confident with your next financial move. Sometimes, victims become intimidated and forget they have the right to claim a chargeback for their expenses. When investors first suspect any legal wrongdoing associated with a contract, they must contact their bank to initial their chargeback request. 

When the bank has collected the details of your situation, they will initiate your claim with a code that matches your interaction. The bank will issue the chargeback to the merchant under question. If the dispute is successful, the money will be returned to your funds within a set period of time. 

Not All Chargebacks are Equal

Fraudsters and scammers have a variety of tactics to manipulate your money. As previously mentioned, banks are required to provide a category code for each chargeback they send for processing. 

Here are some of the most common reasons that victims of fraud file chargeback claims. 

Broken or Damaged Item: In this situation, the product supplier has mishandled the contracted goods, leading to damage or breakages. The buyer is left with an unusable product, and, therefore, can no longer provide a viable service to their customers. 

Item not Received: Some fraudsters take advantage of their victims’ signatures and receive funds without actually providing a product or service. This constitutes a breach of contract and is a definite ground for filing a chargeback claim. 

Transaction Not Recognized: This happens when a fraudster misrepresents a client’s information to purchase extraneous goods unrelated to the contracted agreement. 

Fraud: This is a more common fraud claim. It happens when a service has grossly misrepresented the client’s financial information, and the client claims their information is stolen. 

How Can A Chargeback Company Help with Fraud or Scams? 

With the rise of online fraud–in the form of Forex scams, CFDs, binary options, and chargeback scams– companies have established themselves to help victims recover their funds. These companies are adept at tracking and recognizing industry standard schemes that strip new investors of their financial resources.

For example, companies like Action Refund bring peace of mind to customers who lack confidence in commencing their chargeback requests with the bank. 

Better and Faster Service 

These companies are qualified and trained to pursue your chargeback request before the fraudster has time to cover their tracks. Most chargebacks must be reported in a specific period for the bank to process successfully. 

Chargeback companies expedite the collection of documentation so your claim is processed as quickly as possible. 

Fastidious Attention to Detail 

Chargeback companies will take the lead in finding all the important documentation to prove your chargeback claim. This documentation includes, but is not limited to, written conversations between the customer and the merchant, sales or transaction receipts, proof of shipping (normally in the form of a tracking number or shipping receipt), matching bill-to and ship-to addresses, and any other pertinent information.

These documents are key to prove your claim that funds were misused or misappropriated. 

Expert Advice and a Streamlined User Experience 

It can be difficult for fraud victims to completely identify just how their funds were abused. Furthermore, the task of proving fraud is more difficult when companies aren’t transparent about tracking dates and transfers of information. 

Whether the item was defective, incorrect, if the refund was not processed correctly, if charges were made in duplicate, companies like Action Refund have protocols to make filing a chargeback smooth and easy. 

How Does Fraud Happen? 

Not all fraud is born out of malicious intent. Investors must fully investigate the situation before making a serious accusation or filing for a chargeback. 

Intentional Fraud 

This is the worst-case scenario. If you come face-to-face with a true fraudster, they will take your legitimate information so they are able to purchase from a merchant. The cardholder notices the charge belonging to somebody else and reports it to the bank. In this situation, the merchant has little to no choice about returning your funds. 

With today’s state of online investment, people fall prey to enticing offers that are actually scams in disguise. One example of this modern-day scam is the CFD (cost for difference) trading scam. A CFD is an agreement between an investor and a broker to exchange the difference in a financial product between the contract opening and closing. 

CFD scams occur when somebody opens a hollow pool for investors to sink their money without developing any investments. By creating the simulation that their enterprise is legitimate, they can acquire investors’ money without doing any work. 

Chargeback companies like Action Refund are especially attuned to these types of situations as their business model is focused on online investment fraud. 

Merchant Negligence or Error 

This type of chargeback occurs when merchants fail to provide their clients with specified services. Chargebacks can be filed if merchants provide a broken or damaged product. 

Merchants can often avoid chargebacks by providing exceptional customer service or other offers to rectify the situation. On other occasions, however, it may be most economical for the merchant to accept the chargeback claim.

Friendly Fraud 

Sometimes, authorized cardholders will dispute legitimate charges to their accounts. The cardholders initiate these chargers because a) they are trying to avoid payment, b) they have forgotten that they enacted the transaction, or c) someone else made the transaction under the cardholder’s name without alerting the cardholder. Each of these situations is context-specific and have a differing probability of success. 

Why Do People Fall for Online Investment Scams? 

You might be wondering how people get caught up in online trade investments. It can take a trained eye to detect the legitimacy of an online company. If an investor is new to trading or has never made an online investment, it’s possible that a fraudulent company could slip under their usual defenses. With so much to learn about the developing industry of online trading, it’s easy to get overwhelmed and carried away with investments. 

Furthermore, CFDs are known for an extremely high return on low-investment prices. This offer is very enticing for investors who want to become rich over a short period of time. Fraudsters lure investors with unrealistically high return rates with no actual hope of providing their clients with the said payment. 

Again, the mysterious and exciting nature of online investment makes investors believe they can trust the scammer. Unfortunately, this usually ends very poorly for investors. 

Why Should You File Your Chargeback Claim? 

Other than the obvious reason for reclaiming your lost money, you also have the opportunity to bring these scammers to justice. There are serious consequences if merchants face a constant stream of chargeback claims from the bank. Importantly, a rise in chargeback claims indicates that merchants are not trustworthy business partners. This causes banks to perceive these partnerships as risky, causing them to increase the processing fees on all orders. 

If a merchant receives too many chargeback requests, they may lose their ability to fight chargebacks with the bank. This could cost a merchant large sums of money if any customers could claim friendly fraud with a one hundred percent success rate.