Chargeback Scams Across Industries: How Businesses Can Fight Back

Chargebacks were originally meant to protect customers from fraud, but over time, they’ve become a loophole for scammers looking to game the system. From retail and eCommerce to hospitality and professional services, businesses across industries are losing thousands to fraudulent chargebacks—often with little recourse.

Since processors and banks almost always favor the cardholder, it’s crucial for businesses to understand how chargeback scams work and how to protect themselves.

1. How Chargeback Scams Work in Different Industries

Retail & eCommerce: "Friendly Fraud" Gone Wrong

Many eCommerce businesses deal with "friendly fraud," where a customer makes a legitimate purchase but later disputes the charge—claiming they never received the item, it was unauthorized, or they returned it when they didn’t.

🔹 Common scams:

• Customers claim non-receipt of goods despite tracking proof.

• False claims of damaged products to force a refund.

• "Family fraud" where someone in the household makes a purchase and disputes it later.

Hospitality & Travel: The Last-Minute Cancellation Trick

Hotels, vacation rentals, and travel agencies regularly get hit with chargeback scams from customers who use services and then dispute the charge later—claiming it was unauthorized or that they canceled when they didn’t.

🔹 Common scams:

• Guests stay at a hotel, then dispute the charge as if they never stayed.

• Travelers claim they never received confirmation and dispute airline or event tickets.

• Fake complaints about "poor service" to justify a chargeback instead of requesting a refund.

Professional Services: The "Work Wasn't Delivered" Excuse

Freelancers, consultants, and service providers often experience customers filing chargebacks after receiving work, claiming they didn’t get what they paid for. Since services aren’t physical goods, businesses struggle to provide strong evidence to dispute the claim.

🔹 Common scams:

• Clients accept work, download files, or attend sessions and then dispute the charge.

• Customers claim a service was never rendered when it was.

• Fake payment disputes from companies trying to avoid paying invoices.

Subscription-Based Businesses: The "I Didn’t Sign Up" Scam

Businesses with recurring billing models, like software companies, gyms, and media subscriptions, get hit with high chargeback rates from customers who forget they signed up or don’t want to pay anymore.

🔹 Common scams:

• Customers claim they never signed up for a subscription they used for months.

• Users claim they canceled but didn’t follow the proper process.

• People take advantage of free trials and then dispute the charge when billed.

2. How Businesses Can Fight Chargeback Scams

Since banks favor customers in disputes, businesses need to proactively protect themselves by preventing fraudulent chargebacks before they happen and building strong evidence to fight back.

1. Use Strong Payment & Fraud Protection Tools

• Implement 3D Secure (Visa Secure, Mastercard Identity Check) to shift fraud liability away from your business.

• Require CVV codes and AVS (Address Verification Service) checks for transactions.

• Work with processors that offer chargeback alerts and prevention tools (like Ethoca or Verifi).

2. Have Clear Policies & Strong Documentation

• Make terms of service and refund policies crystal clear and require customers to agree before purchase.

• Keep proof of delivery, tracking numbers, and signed receipts for retail and eCommerce sales.

• For services, save emails, contracts, project approvals, and call logs as evidence.

3. Respond to Chargebacks Quickly & With Strong Evidence

• Processors give businesses a short window (typically 7–30 days) to dispute chargebacks—respond ASAP.

• Include all evidence proving the transaction was valid (purchase logs, shipping details, contracts, etc.).

• Write a clear, professional rebuttal letter explaining why the chargeback should be reversed.

4. Monitor & Reduce Chargeback Ratios

• Businesses with chargeback ratios above 1% of transactions risk higher fees or account shutdowns.

• Track disputes by reason code to find patterns and prevent future fraud.

• If you process high volumes, consider a chargeback management service to monitor disputes for you.

3. How PlutosPay Helps Businesses Fight Chargebacks

At PlutosPay, we help businesses stay ahead of chargeback scams with:

🔹 Chargeback Prevention & Alerts – Stopping fraudulent disputes before they happen.
🔹 Dispute Management – Helping businesses respond with strong evidence to win cases.
🔹 Fraud Protection – Implementing AI-driven transaction monitoring to detect risky payments.
🔹 Processor & Bank Relationship Management – Ensuring businesses don’t get labeled "high-risk" due to chargeback issues.

💡 The result? Fewer chargebacks, better fraud prevention, and more money staying in your business.

4. Key Takeaways

✅ Chargeback scams affect businesses in every industry—from eCommerce and hospitality to services and subscriptions.
✅ Most banks side with customers, so businesses need strong policies, fraud protection tools, and airtight documentation.
✅ Chargeback ratios over 1% can lead to processor penalties or account shutdowns.
✅ PlutosPay helps businesses reduce and fight chargebacks with proactive prevention and dispute management.

💰 Tired of losing money to chargebacks? Let’s talk.

Conclusion: Take Control of Chargebacks Before They Hurt Your Business

Fraudulent chargebacks aren’t just a cost of doing business—they’re a major financial risk that can drain revenue, damage processor relationships, and even get accounts shut down.

Businesses that take a proactive approach to chargeback prevention and fraud protection will keep more of their revenue and avoid unnecessary losses.

At PlutosPay, we help businesses implement fraud tools, manage disputes, and keep chargeback rates low—so you can focus on growth, not fighting for your own money.

📩 Contact us today for a free chargeback risk assessment.