High-end retailers have revealed that they are losing significant revenue to chargeback fraud. Card companies, retailers and payment acquirers all seem powerless in quelling the rise of chargeback fraud, which is quickly becoming one of the most prevalent frauds.

Recently in an interview with “Computing” magazine a high-end online retail CIO explained exactly how the ‘chargeback loophole’ worked, in simple terms a fraudulent purchaser denies receipt of goods, which leaves the selling organisation with no recourse but to accept its loss and foot the bill.

Cyber criminals are making a high-end purchase online, then signing for the goods once they arrive (with a fake name or random scribble), they then call the retailer to report non-delivery, insisting they get their money back.

Retailers argue their case that the delivery occurred, however the fraudster states in writing to their card company that the delivery didn’t occur, and that the signature is not theirs, the retailer then loses all rights to the funds and the fraudster is awarded a chargeback.

The same CIO commented: “This loophole has to potential to set the online payment industry back, as this level of fraud continues to rise retailers will start to lose faith in the system. As banks do not lose any money so have no interest in fixing the situation.”

A preventative measure to combat chargeback fraud is to use HooYu Investigate to better understand how fraudsters are connected, and instantly see linked between addresses, individuals and their contact details. This enables retailers to instantly see if the purchaser is associated with known fraudsters and to confirm the information they have been provided is legitimate. This is especially useful when the retailer is dealing with small high value items such as designer watches, jewellery or electrical goods.

HooYu Investigate gives you instantly a 360degree view of your subject enabling you to verify addresses and known connections:


It also enables retailers to instantly find connections between two entities, meaning before goods are shipped if a purchase is flagged retailers can check to see if there is a connection to another known chargeback fraudster or address:


With the rise in chargeback frauds increasing and recent in correspondence shared with “Computing” magazine, GlobalPay, a leading payments acquirer, confirming that the chargeback loophole exists, and that they unable to give any further help with regarding prevention. HooYu Investigate could help retailers prevent millions of pounds being lost to this now common fraud.