Sure, I am naive. But I am also optimistic about finding a solution. Thank you for sharing your experience though.

However, the research I have been doing has been very enlightening. For example, Verified By Visa and Master SecureCode, both buried in the fine print, say that if these services are used the merchant has chargeback protection from 'unauthorized payments'. I have also found businesses that specialize in protecting against chargeback.

Definitely Card-Not-Present transactions have a high risk of fraud, and those trying to rip off merchants with Bitcoin transactions are a bit sharper than your average scamster. But I still think that, especially as a Canadian, a system can be created where it is either a) completely secure, or b) chargeback fraud is significantly reduced, and that which cannot be reduced is priced into the system.

(And I will definitely claim naivety in dealing with CC companies, Interac & Paypal for this, I do not have an illustrious career as a merchant to call back on as experience but I am a damn good researcher and moving in a good direction towards a solution everyday).

Nonetheless, here in Canada the regulators have taken less of an aggressive stance towards Bitcoin. Of course, I will still have to conduct due dilligence on figuring out the legal framework exactly, and covering my ass, but here in Canada there should be no reason why a Bitcoin sale cannot be approached as would be the sale of any other digital, nontangible good (downloads etc). I think the blockchain offers an even better legal case than would a digital download, because you can verify exact transactions. But if regulators plan on taxing Bitcoin like a regular good (which they do), and I plan on paying the taxes on Bitcoin like a regular good (which I do), there is no reason why I cannot have the extent of the law behind me to rally my case, especially if legal procedures are followed properly.

I am still going to bury myself into phone calls, fine print and legalese 'terms of service' today, and for a many a days to come, but the way I see things shaping up there is are two kinds of anti-fraud protection, protecting you from chargebacks (which can be served for far more than just an 'unauthorized payment'.) But specifically, to battle unauthorized payment I see:

1) The Mastercard/Visa/Interac terms and procedures: following their terms by the books, this includes utilizing Secure Code/Verified By Visa, which is in effect their solution against non-card-present transaction fraud. A business such as chargeback.com will help in this regard, (if you google chargeback protection, which I did before I went to sleep last night, you find a lot of businesses offering such a service).

2) Your personal comfort level. A phone call & all the lengthy procedures you went through is one way to deliver yourself comfort, even if, for example, a phone call could do nothing in the legal framework of Visa/Mastercard (I'm speculating, I don't know that for sure.) However, there are far more options to make you feel happy, and that you could potentially use to protect yourself. Off the top of my head, I think one is a video chat after seeing pieces of government ID and thus being able to tell you are speaking to the same person. Secondly, having a personal relationship, even on the way to friendship, with your clients I'm sure would go a long way in giving you personal comfort that you weren't susceptible to chargeback fraud (as opposed to legally knowing you are not susceptible to chargeback fraud).

Either way, non-card-present chargeback fraud is an issue that all busineses face and have to deal with. Big corporations have entire teams of people, who all they do is monitor chargeback fraud. It's not like this an issue secluded to only Bitcoin transactions. What I have in mind is an actual legitimate, registered company with clean books and taxes payed, transmitting an online good to customers. I want to play it as clean and by the books as humanly possible. Included with that is a strategy to minimize and price in possible chargeback fraud, but it is only a fraction of the overall things that must be dealt with. I certainly do not believe it is some 'Achilles heel' that can never be worked around. The fact is, if Canadians at large want to purchase cryptocoins, and we want laypeople possessing them, we are going to have to find something more user friendly than trade exchanges. People will need alternative, and easier payment methods, to pay directly for their Bitcoin, and I think that can be achieved legally and securely with a legitimate business.

Cheers, thanks for the healthy debate,
Anthony