Wikipedia states that a chargeback is the return of funds to a consumer, forcibly initiated by the consumer's issuing bank. Specifically, it is the reversal of a prior outbound transfer of funds from a consumer's bank account, line of credit, or credit card.

When a customer calls to dispute a transaction, the bank usually credits the customer's account immediately, pending further investigation. This is known as a "chargeback." Chargebacks occur for many reasons, including "non-delivery of goods," "credit not processed" and "item not as described," but chargebacks for "fraud" are the most common.

Seventy percent of all e-commerce chargebacks are identified as fraud, according to Mastercard. What most merchants have experienced, however, is that fraud doesn't always mean the purchase was unauthorized. More and more, cardholders are committing friendly fraud due to buyers' remorse or financial hardships.

Friendly fraud is difficult to anticipate or identify. Unlike a true fraud chargeback, which can often be predicted through scoring or behavioral risk models, a good customer can turn into a friendly fraudster at any time, without warning.

For this reason, many merchants feel that friendly fraud is impossible to detect or prevent. The fact is, there are ways to reduce friendly fraud -- and committing to reduce friendly fraud gives you the added benefit of reduced refund rates. Source: e-commerce times

In other words, they may be disputing an authorized transaction stating to their credit card company that it was an unauthorized transaction in order to legally steal from you.



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