Shoplifting has long been the bane of small businesses and now thieves have moved online, with frustrated traders reporting customers making fraudulent claims for their money back.<\/p>\n
The fake refund claims \u2014 instigated by shoppers requesting transaction reversals, known as “chargebacks”, through their banks \u2014 have been labelled theft and led to shop owners calling for greater protection from cybercriminals.<\/p>\n
Sydney fashion boutique owner Ainslie told The Business she had lost thousands to chargebacks in recent months and had little success convincing banks not to take money back after purchasers falsely disputed charges on their credit cards.<\/p>\n
Ainslie, who asked to be identified by her first name only, said she had not heard of the practice until she was duped by a woman who seemed like a genuine customer \u2014 a case of what has been dubbed “friendly fraud”.<\/p>\n
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E-commerce is expected to overtake “card present” \u2014 customers in shops \u2014 transactions next year and online traders are feeling exposed to cheats. (Supplied: Unsplash\/rupixen.com<\/a>)<\/p>\n “I actually did speak to [her] on the phone, so she actually asked me about the sizes and I told her what size to get and she then ordered it online,” Ainslie said.<\/p>\n “Then maybe five or six weeks later, I got the [chargeback] and I tried to call her and she just hung up.”‘Money had been already taken from our account’<\/p>\n A chargeback is the reversal of a purchase, in this case online, initiated by a customer through their bank.<\/p>\n Customers may lodge legitimate chargebacks if they are charged for an order they never receive and are denied a refund by the retailer, or if they notice card charges for purchases they have not made.<\/p>\n Gift cards recipients caught out by ‘activation rules’<\/a><\/p>\n If you receive a gift card for Christmas this year you might fall foul of “activation rules”. Here’s how.\u00a0<\/p>\n However, fraudulent chargebacks, when customers receive their order, claim a refund and keep the item, mean retailers are being left out of pocket and with no way to recover their stock.<\/p>\n In the past eight months, Ainslie lost more than $2,000 to one fraudulent chargeback and $560 to another.<\/p>\n She said there was no avenue to retrieve the money or the items.<\/p>\n “The money had already been taken from our account both times before we really even had the chance to write anything about the dispute,” she said.<\/p>\n Loading…Hundreds of messages from small businesses<\/p>\n Victorian boutique owner Sam Kemp took to social media in frustration after falling victim to two fraudulent chargebacks in a week.<\/p>\n “I know $1,000 doesn’t seem like much \u2026 but when it just keeps happening over and over, I feel like it’s just wearing me down,” she said. Sam Kemp says hundreds of business owners contacted her after she posted her video. (ABC News: Peter Drought)<\/p>\n Despite keeping evidence that the orders were fulfilled, Ms Kemp said it was not enough to stop the refund being taken.<\/p>\n “I had confirmed with the customers before sending these orders out, they had confirmed they’d placed the orders \u2026 and then I even have photos from Australia Post that the parcels were delivered \u2026 and then the chargeback comes through,” she said.<\/p>\n Ms Kemp, who sells fashion and giftware at Sare Store in Birchip, western Victoria, did not realise how many others had been hit by the fraud until she posted her video on social media.<\/p>\n “I’ve had hundreds and hundreds of messages from other small businesses, messaging the same thing happening to them,” she said.<\/p>\n “The losses are huge for small businesses and the stresses are enormous.<\/p>\n “It really does eat into the profit at the end of the day because there’s not a lot of profit.”<\/p>\n The experience and response from fellow business owners prompted Ms Kemp to arrange meetings with members of state parliament to raise the alarm<\/p>\n Online shopping has exploded since pandemic lockdowns. (Getty images )<\/p>\n “This is just another added pressure for small business \u2026 it’s fraud, it’s theft,” said Nationals MP Jane Benham, Ms Kemp’s local member.<\/p>\n “We see headlines in newspapers all the time about shoplifting and robberies in shop fronts, but this is another level. It’s happening digitally.”<\/p>\n Victoria’s opposition small business spokesperson, Brad Rowswell, who also met the retail owner, said he would contact each of the major banks and ask them to step up.<\/p>\n “Banking institutions need to realise just how tough it is to operate your small business in the first place, let alone go through this hoop and that hoop \u2026 only to get the wrong answer,” he said.<\/p>\n Brad Rowswell says banking institutions need to act. (ABC News: Peter Drought)<\/p>\n A spokesperson for the Australian Banking Assocation said: “Card schemes like Visa and Mastercard have specific rules about the basis upon which chargebacks can be raised and the timeframe in which they must be raised.<\/p>\n “Banks are aware of these concerns from small businesses and, where possible, banks will work with small businesses to resolve any disputes as quickly as possible.”<\/p>\n A spokesperson for Visa said it had recently introduced rules “allowing businesses to use historical purchasing data to fight ‘friendly fraud'”.<\/p>\n<\/p>\n
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