Ontario businesses say credit card chargebacks give consumers unfair advantage
A credit card chargeback is something a consumer can do if they want to dispute a credit card charge because it was fraudulent or they didn’t receive the item.
While it can be a helpful tool for consumers, some businesses say the chargeback process used by credit card companies also creates a loophole for customers to receive an item, dispute the charge and then keep both the item and their money.
Toronto resident Eka Maysyuk said she has a custom stonework business called KM Haus Solutions in Etobicoke, which sells custom-made stone products for home interiors and exteriors.
She said that over a year ago, she sold almost $90,000 worth of products to a client to install on his house.
Fourteen months later, the client requested a chargeback through his credit card company seeking a full refund.
“I was shocked. They want to take $90,000 dollars from me a year later," Maysyuk said.
While Maysyuk said she did agree to take back some of the stonework to help the client sell it because he didn’t need it all, the majority of it is currently on his house, still he is seeking to get his money back and keep her product.
“I can't understand how this can happen, you use the product, it is clearly installed on your property and one year later you come back to the company and you want all your money back. It doesn’t make any sense,” Maysyuk said.
Bradley Williams operates Northern Games in Lindsay, Ont., selling collectibles and sports memorabilia.
Two buyers used credit cards to purchase high-end sports cards and all the transactions went through, but weeks later they did a chargeback on all the purchases they had made which totalled $120,000.
The chargebacks went through and they got to keep Williams sports cards and the $120,000.
“They bought roughly 30 boxes of cards. They purchased about $120,000 worth of product off me and now every dollar has been charged back to my credit card,” Williams said.
Williams says if the credit card company does not return the $120,000 he may have to close his business.
“They are telling me I am liable for their cards being fraudulently used. I shouldn’t have to investigate every person who uses a credit card at my store. That's not my job," Williams said.
Geocomply is a fraud prevention and cyber security company based in Vancouver, which helps businesses combat chargeback fraud.
“Not all chargebacks are fraudulent, however we have seen a massive growth of chargeback fraud since the onset of the pandemic," said Isabella Edmonds, government relations associate with Geocomply.
A study by Juniper Research found customers who have had a successful chargeback are nine times more likely to repeat it. The study also found that 43 per cent of merchants believe they have no chance of winning a chargeback dispute.
Chargebacks are now also used by fraudsters, who are trying to take advantage of the system by buying products with credit cards and then requesting chargebacks.
“Unfortunately if the merchant ends up losing this chargeback dispute, they end up losing money to the fraudsters who end up keeping the product they have purchased as well as the return of the funds," Edmonds said.
Maysyuk is now in a legal dispute with her customer over the terms of the purchase of the custom stone, as well as the chargeback of $90,000 and has decided to close her business.
“My amount was so large I decided to fight for it, but if customers do smaller amounts, businesses may not be prepared to get into lawsuits for those amounts, so they are just out of pocket," Maysyuk said.
The Juniper Research study also found a lot of chargeback fraud happens when a credit card is not physically present and it found between 2019 and 2023 retailers worldwide will lose about $130 billion to chargeback fraud.
CTVNews.ca Top Stories
BREAKING Average hourly wage in Canada now $34.95: StatCan
Average hourly wages among Canadian employees rose to $34.95 on a year-over-year basis in April, a 4.7 per cent increase, according to a Statistics Canada report released Friday morning.
From outer space? Sask. farmers baffled after discovering strange wreckage in field
A family of fifth generation farmers from Ituna, Sask. are trying to find answers after discovering several strange objects lying on their land.
This iconic Canadian song is turning 50
Andy Kim's 'Rock Me Gently' is marking a major milestone, as it celebrates its 50th anniversary.
Oprah Winfrey: I set an unrealistic standard for dieting
Oprah Winfrey said on Thursday evening that she has long played a role in promoting unhealthy and unrealistic diets.
Ontario family receives massive hospital bill as part of LTC law, refuses to pay
A southwestern Ontario woman has received an $8,400 bill from a hospital in Windsor, Ont., after she refused to put her mother in a nursing home she hated -- and she says she has no intention of paying it.
Toronto police called to Drake's Bridle Path mansion for another alleged intruder on Thursday
Toronto police say a man who allegedly attempted to access Drake’s Bridle Path property was taken to hospital on Thursday after an altercation with security guards.
Flat tire on a highway? Here's why you shouldn't try to fix it
If you're cruising down a highway and realize you have a flat tire, you may want to think twice before stopping to fix it on the side of the road.
Storm-battered U.S. South is again under threat. A boy swept into a drain fights for his life
Dangerous storms crashed over parts of the U.S. South on Thursday even as the region cleaned up from earlier severe weather that spawned tornadoes, killed at least three people, and gravely injured a boy who was swept into a storm drain as he played in a flooded street.
Broadcaster and commentator Rex Murphy dead at 77: National Post
The National Post is reporting that Rex Murphy, the pundit and columnist who hosted a national call-in radio show for decades, has died.