The Chargeback That Turned Into Fraud

I run a small online store selling custom-made clothing. My business was doing well, and I had built a reputation for delivering quality products to satisfied customers. One day, I received an order from a new customer for several expensive custom items. The transaction went through smoothly, and I fulfilled the order, shipping the items to the customer’s address.

A couple of weeks later, I received a notification from my payment processor: the customer had filed a chargeback, claiming they never received the items. I was shocked. I had tracking information that showed the package was delivered, signed for, and everything seemed legitimate. Still, the payment was reversed, and the money was taken out of my account.

I contacted the customer to resolve the issue directly, but my emails went unanswered. I tried calling the phone number provided with the order, but it was disconnected. It became clear that this was not an innocent mistake — I had been a victim of chargeback fraud.

Chargeback fraud, or "friendly fraud," happens when a customer makes a legitimate purchase but later disputes the charge to get their money back while keeping the goods. In my case, the scammer had received the expensive custom clothing, and I was left with no payment, no way to recover my items, and a chargeback fee on top of that.

Fighting the chargeback wasn’t easy. I provided my payment processor with all the proof I had — tracking numbers, emails, and order details — but the process was slow, and there was no guarantee I would win. Meanwhile, I was out hundreds of dollars, and my business took a hit from the loss.

After months of back-and-forth, I was lucky enough to win the dispute, but many small businesses aren't so fortunate. This experience opened my eyes to how easy it is for scammers to exploit the chargeback system and how difficult it is for sellers to defend themselves.

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