Quote from: btcinstant on September 14, 2013, 04:36:14 AM

Quote from: BradZimdack on September 14, 2013, 04:33:13 AM

Quote from: btcinstant on September 14, 2013, 02:51:09 AM

I figured everyone would do chargebacks on ANY product right away if it worked everytime. There must be some safe guards since I've never done it either.

I'm actually shocked this isn't already happening. My company has a lot of experience dealing with credit card processing on the merchant side, and I can tell you that the chargeback situation is getting worse and worse for merchants every day. People are figuring out that you can, in fact, go on a big shopping spree and then charge it all back. If you consider the incentive structure involved, you can see that it is likely to only get worse:

* Any customer can initiate a chargeback on any purchase. Whether he received the merchandise, signed for it, or even bought it in person and provided a copy of his photo ID along with a signature does not matter. His card issuing bank will accept the chargeback request and immediately deduct the funds from the merchant.

* The merchant will have an opportunity to provide the customer's card issuing bank with supporting evidence that the customer's claim is without merit. What is accepted as evidence is arbitrary and subjective. (I can provide you lots of specific examples that would make you really angry at the injustice of this system.)

* Statistically, card holders who dispute a charge are more likely to default on their credit card debt. Card issuers lose money when consumers don't pay their credit card bills.

To put it more concisely, the bank who gets to decide whether or not to uphold the chargeback will tend to lose money by finding in favor of the merchant. Banks will always choose the course of action that makes them the most money, not what would be seen as fair or ethical to honest men.

I'm absolutely amazed that everyone isn't charging back every purchase all the time. Perhaps we'll get to that point once people realize there's nothing stopping them. The situation reminds me of a line from George R.R. Martin's Game of Thrones: "Power resides where men believe it resides...[power is] a shadow on the wall." If people start to realize en masse that there's nothing stopping chargebacks on absolutely everything, other than a "shadow on the wall", all hell could break loose for credit card payments.

Here's something I posted a couple years ago about some of the other problems with credit cards for merchants:

https://bitcointalk.org/index.php?topic=36729.0

Starting to think of opening a service that allows people to post chargebacks automatically upon purchase lol....

You would probably be rich overnight. Grin