Think combating fraud is not of paramount concern to online merchants? The topic was front and center at the Merchant Risk Council's annual conference held in early March. Online merchants gathered there were eager to get a deeper level of understanding of how better to combat fraud--fraudulent chargebacks chief among their worries.
A fraudulent chargeback occurs when a credit card transaction is refuted by the cardholder. Chargebacks can be classified into three major categories, the first two of which are fraud-related: "True" or "third-party" fraud are most often seen with stolen credit cards. "Friendly" fraud occurs when the actual cardholder makes the transaction and then decides to refute the transaction after the fact. While there are times the chargeback is absolutely valid, there are, in fact, many occasions when the cardholder is intentionally defrauding the merchant in question.
Finally, chargebacks often occur not as a result of deliberate intent to defraud, but because merchant-specific business processes (e.g., murky terms and conditions or poor customer service) drive that result.
Source: CRM Buyer, http://crmbuyer.com