We've recently seen a lot of debit card fraud from counterfeit cards where the card information was manually keyed in and when the bank submits a dispute the merchant returns signed copies of the receipts and we're told there are no chargeback rights. The charges are down in Florida and we're in Iowa. Our customers still have possession of their cards and we know that we have to make them whole, but it doesn't seem right that the fraudsters can just scribble on the receipts and then the bank loses it's chargeback rights because they can produce a signed receipt. The signatures look nothing like the name on the cards and the transactions are quite large for convenience stores, $150-$300 each in purchases, mostly for cigarettes, and multiple purchases are made so it's adding up quickly. Is this just a "cost of doing business" and the bank will always be on the losing end for these types of transactions, or is there something more we should be doing to dispute?

Are you Visa or MasterCard. I can explain a bit for Visa, but unsure if MC has the same rules in this regard.

I can explain for both. Because VISA/MC both want to have an many authorizations go through as possible ($$$) they have many different methods of processing a card. Whether a Card Verification Code (CVC) or Card Verification Value (CVV), VISA/MC have a special authorization program to all merchants in a card present/face to face environment to process transactions when faced with a demagnetized card. Instead of swiping the card, the merchant will manually key in the card number, expiration date and three digit code on the back. If an authorization is obtained, the merchant has the same protections as any other card present/face to face transaction.

With EMV cards, the chip should be the first attempt, the mag stripe second (using a technical fallback transaction) and the manual entry third.

And to answer the question asked, yes you will always be on the losing end of transactions processed using this authorization method.

Thanks, Brian! Your explanation is so helpful (they always are :)) We upgraded to EMV cards for all our customers at the beginning of the year hoping to see a decrease in fraud claims, and while we've seen a small decrease, it's frustrating to see that there are still ways around the chip cards and the bank is still losing so much money.