Legal Responsibility: The Merchant and the Customer

As the owner of your business, you're responsible for protecting your customers. With identity theft and fraud continuing to rise at alarming rates, credit card companies and regulatory agencies are saddling e-commerce merchants with the bill (including shipping fees and the costs of the goods). You can prevent your customers from being victims of identify theft and fraud — and stay in business yourself — by being vigilant about the credit card payments you accept and keeping your customers' information as private as possible.

Avoiding charge backs

Most of the time, fraud comes in the form of charge backs. Customers using credit cards and other online forms of payments (that access credit cards and bank accounts) can request that charges be removed. The Fair Credit Billing Act (FCBA) allows consumers to dispute purchases.

A customer can request that a charge be removed for two reasons:

  • The card is stolen or otherwise used without the legal cardholder's permission.
  • The customer doesn't believe that you fulfilled your obligation in delivering the product. (You either didn't deliver it or delivered a different product from what you promised.) Mistakenly delivering an incorrect product isn't a true case of fraud, but it does lead to charge backs. It becomes fraud if you did indeed ship the correct product but the customer insists that you did not.

Unfortunately, charge backs happen quite frequently, and proving a customer wrong ...

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