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Chipped Cards=Less Fraud

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Do you have any recommendations on investigating dispute claims where a chip card is used? Our processor says we have no chargeback rights and can't do anything when a chip reader has been used. Customers still claim the transactions are not theirs and we are stuck with no other option but to pay the claim.

I have seen no verified cases of actual counterfeited chips being used. I have read it was possible, but not seen verified practices of this. As such, it would take little evidence to convince me the consumer authorized use after they state the card has not been out of their possession. Any signature, IP address, camera, delivery of products or services, proximity or usefulness of the product or services to the consumer would help the bank's case.

I did once have a case where a teacher had this issue. It was pre-chipped cards, but that wouldn’t change this case. The teacher had her card in her purse, but there were repeated charges using it on different dates that were not authorized and in-between there were valid charges. It turned out the teacher regularly left the classroom and a student took the card, gave it to her mother out the window, the card was used and replaced. It was a very odd case but was found to be valid based on evidence gathered during use. Absent that, chipped cards are more secure when used in the transaction.

First published on 06/20/2021

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