On the opposite side of this discussion, I have had a client purchase an expensive item using his credit card (Citi Bank), and I use Stripe for the business end of the credit card transaction. His wife did not recognize the transaction and marked it fraudulent. He wrote and submitted a Citi Bank disclaimer stating the charge was indeed valid. The account is in his name. I also submitted this form, along with proof of receipt of the phonostage amplifier, and customer satisfaction with the product.
Stripe fined me 10%, I was required to wire the funds to Citi Bank for additional charges. Stripe now holds 25% of my sales in a 6-month non-interest escrow account to offset such 'friendly fraud' chargebacks. This also is negative on my business credit - regardless of resolution, the incident is a fault of the business. I also can not switch from Stripe to another carrier for at least 6 months due to this assessment.
Citi Bank did not honor the payment. Per the terms of credit card services, I can not demand an alternative payment although I did request it. He legally can keep my product without payment and I have no legal recourse. This customer resides in the US and chose not to honor alternative payment.
This event has caused us as a business to reassess purchasing terms and it also certainly affects our ability to provide the best pricing for other customers.
Sorry to hear.
I had my 1st ever fraudulent chargeback a little over a year ago. Paypal fought it for me and I provided evidence. Reason given for the claim was the customer was charged for a canceled subscription service, which I am clearly not. My terms of sale are on my website. The case was still decided in favor of the person committing blatant fraud.
I've looked into it and you do have recourse, a chargeback is similar to a canceled check. Paypal advised me to sue for the funds, I may but it's really only worth it on principle as I can just file it as a business loss so it's deductible, at least that covers some of my costs.
I don't know of any business that doesn't suffer significant losses from chargeback fraud or fraudulent paypal claims. We need better regulation to prevent this criminal activity. I think a lot of people make a living doing this, and others do it because they feel offended in some way, and thinks that justifies committing a crime in response.
It does look like Paypal backed off from the policy change that was the subject of this thread though, seems like they still give a generous 180 days to issue a refund. I know paypal can be difficult to deal with but I've been happy with them. I don't know of any service that people don't have horror stories about either.