How do Chargebacks work?

[btcinstant]

Hypothetically, if I was able to sell a product x for which is bought via credit card in order to buy Bitcoins  can someone get away with saying they never got the product x ? In other words, they can't claim they never got it the item when it will be very obvious.

[will1982]

Bitcoin has no chargebacks.

[btcinstant]

Bitcoin has no chargebacks.

Yes, got that part. I'm speaking about Credit Card chargebacks.
Updated post to reflect this.

[cbhelp]

Using a reversable payment method to buy bitcoins is generally bad for the btc seller. You gotta have a lot of trust to donut, that the person won't charge back.  Its hard for a cc company to know who got sent the bitcoins, wallet addresses can belong to anyone.

[smoothie]

The way I understand it is if the Merchant is in breach of their legal contract as a seller of goods or services the buyer can file a complaint and have the authorities force a chargeback on the merchant's account.

I personally never initiated one...ever.                                            

[btcinstant]

Using a reversable payment method to buy bitcoins is generally bad for the btc seller. You gotta have a lot of trust to donut, that the person won't charge back.  Its hard for a cc company to know who got sent the bitcoins, wallet addresses can belong to anyone.

Yup that make sense. But what if the product ( non-bitcoin) how do people chargeback against it?  Meaning the item they are purchasing is non-bitcoin related  but still will be used to get Bitcoins.

[btcinstant]

The way I understand it is if the Merchant is in breach of their legal contract as a seller of goods or services the buyer can file a complaint and have the authorities force a chargeback on the merchant's account.

I personally never initiated one...ever.                                            

I figured everyone would do chargebacks on ANY product right away if it worked everytime. There must be some safe guards since I've never done it either.

[Foxpup]

can someone get away with saying they never got the product x ?

No, but they can get away with returning the product while claiming it is defective, and they can obviously prove they returned it. They get their money back and you get your product back, so everyone's even. Except for your bitcoins, of course, which you'll never see again. Oops.

[btcinstant]

can someone get away with saying they never got the product x ?

No, but they can get away with returning the product while claiming it is defective, and they can obviously prove they returned it. They get their money back and you get your product back, so everyone's even. Except for your bitcoins, of course, which you'll never see again. Oops.

How about if the product isn't being shipped its a virtual product that has a proof they've gotten it all documented.

[DeathAndTaxes]

can someone get away with saying they never got the product x ?

No, but they can get away with returning the product while claiming it is defective, and they can obviously prove they returned it. They get their money back and you get your product back, so everyone's even. Except for your bitcoins, of course, which you'll never see again. Oops.

How about if the product isn't being shipped its a virtual product that has a proof they've gotten it all documented.

What proof?

Remember there is two types of fraud
a) identity fraud where someone OTHER than the cardholder uses the car without the cardholders permission
b) so called "friendly fraud" where the cardholder pretends that either scenario "a" occured or they never received the product.

Please explain how you can prove:
a) the person using the card is the cardholder
b) the product was deliver to the cardholder

[smoothie]

The way I understand it is if the Merchant is in breach of their legal contract as a seller of goods or services the buyer can file a complaint and have the authorities force a chargeback on the merchant's account.

I personally never initiated one...ever.                                            

I figured everyone would do chargebacks on ANY product right away if it worked everytime. There must be some safe guards since I've never done it either.

Yeah I agree with this.

Hopefully someone here can shed some light on those safe  guards.

[btcinstant]

can someone get away with saying they never got the product x ?

No, but they can get away with returning the product while claiming it is defective, and they can obviously prove they returned it. They get their money back and you get your product back, so everyone's even. Except for your bitcoins, of course, which you'll never see again. Oops.

How about if the product isn't being shipped its a virtual product that has a proof they've gotten it all documented.

What proof?

Remember there is two types of fraud
a) identity fraud where someone OTHER than the cardholder uses the car without the cardholders permission
b) so called "friendly fraud" where the cardholder pretends that either scenario "a" occured or they never received the product.

Please explain how you can prove:
a) the person using the card is the cardholder
b) the product was deliver to the cardholder

Yes, not speaking to ID fraud that is different more so "friendly fraud".  I mean you are saying some will claim a chargeback on product x  even though it will show they received the item?

[frankenmint]

can someone get away with saying they never got the product x ?

No, but they can get away with returning the product while claiming it is defective, and they can obviously prove they returned it. They get their money back and you get your product back, so everyone's even. Except for your bitcoins, of course, which you'll never see again. Oops.

okay so I've been through the chargeback process on both sides and here is how it works:

person files a claim with their credit card company or bank.  The funds are immediately withdrawn from the merchants account and placed into a temporary holding account.

the merchant is mailed a letter from the customer's cc company with space to reply with a written rebuttal.  If the charge back is fraudulent, the merchant will provide evidence like a signed proof of delivery or a merchant slip with the customer's signature on it.  If those things are located, then the merchant does have a chance to argue against the chargeback and have his funds recovered

It all depends on if there is a service being used around the transaction like Amazon, paypal or ebay.  People who lose on chargebacks  involving those companies have lost because it was expressly prohibited to offer the sale of those types of goods according to the terms and conditions set forth on the website and thus the seller typically has zero recourse.  

[DeathAndTaxes]

Yes, not speaking to ID fraud that is different more so "friendly fraud".  I mean you are saying some will claim a chargeback on product x  even though it will show they received the item?

Once again how EXACTLY will you show the CARDHOLDER not someone claiming to be the cardholder received something.  Please be specific.  If you just use vague terms like "show they received" well the answer is "you didn't convince the card issuer and they side the with cardholder".

[btcinstant]

Yes, not speaking to ID fraud that is different more so "friendly fraud".  I mean you are saying some will claim a chargeback on product x  even though it will show they received the item?

Once again how EXACTLY will you show the CARDHOLDER not someone claiming to be the cardholder received something.  Please be specific.  If you just use vague terms like "show they received" well the answer is "you didn't convince the card issuer and they side the with cardholder".

No,no I'm not talking about someone claiming to be the cardholder  I mean just in general chargebacks. Someone claiming they never received the product x WHEN clearly it will be evident they did.

[DeathAndTaxes]

Ok one last time:

they say "I didn't receive it" and you can't prove they did.

OR

they say "I have no idea what this is I didn't buy it" and you can't prove otherwise.

Remember the person making the final decision is the card issuer.  The cardholder NOT YOU is their customer.  Unless your proof is absolutely air tight they are going to side with the customer.


Unless you intend to explain how you believe you can PROVE the cardholder made and received the purchase with specific details it is like asking "how can people get away with murder?"  Kinda a useless question.

Simple version IF (notice the key word IF) you can prove the purchase was made by the cardholder AND the cardholder received the product then you will win the chargeback.  Most likely you THINK you can prove it but you can't and thus will lose the chargeback.

[btcinstant]

they say they didn't and you can't prove it

This scenario ^^ but I can prove it.  Now, it will be a point where they won't bother doing a chargeback since it will be so obvious ( actually, the cardholder will see it themselves that is the case ) . I'm assuming it won't stop all chargebacks I was just curious.

But I hear what you are saying D & T.

[DeathAndTaxes]

they say they didn't and you can't prove it

This scenario ^^ but I can prove it.  Now, it will be a point where they won't bother doing a chargeback since it will be so obvious ( actually, the cardholder will see it themselves that is the case ) . I'm assuming it won't stop all chargebacks I was just curious.

But I hear what you are saying D & T.

Most likely you are wrong about proving it.   Just about any proof you think you have a scammer has figured out a way around it. You don't have proof, you only think you do and thus will lose the chargeback.

[btcinstant]

they say they didn't and you can't prove it

This scenario ^^ but I can prove it.  Now, it will be a point where they won't bother doing a chargeback since it will be so obvious ( actually, the cardholder will see it themselves that is the case ) . I'm assuming it won't stop all chargebacks I was just curious.

But I hear what you are saying D & T.

Most likely you are wrong about proving it.   Just about any proof you think you have a scammer has figured out a way around it. You don't have proof, you only think you do and thus will lose the chargeback.

Amazing if you think about it. I suppose this is why credit card fee's are so much.

[DeathAndTaxes]

Amazing if you think about it. I suppose this is why credit card fee's are so much.

Credit card fees are high because it is a closed network and merchants have little negotiating power.  Accept the rate or lose customers with credit cards.   Credit card company loses nothing to card not present fraud.  They take the money from the merchant AND charge the merchant $35 or more to cover their cost of determining the merchant can't prove they are honest.