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Processors say economic recession has led to increase in chargebacks

January 29, 2009

Digital Transactions: With the recession throwing people out of work, payments processors are reporting that their merchants are experiencing sharp increases in e-commerce chargebacks stemming from so-called friendly fraud — fraud that results when a consumer repudiates a transaction as unauthorized in hopes of escaping liability for payment. First Atlantic Commerce Ltd., an e-commerce transaction gateway in Bermuda that serves sellers of digital content, says its merchants have seen a steady rise in chargebacks since October. "Banks that never had merchants on the global chargeback monitoring program are now getting notification from Visa and MasterCard," said Andrea Wilson, chief executive of FAC. "Merchants are being fined for a situation they have absolutely no control over."

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