Merchants recover 17% of fraudulent chargebacks, study finds

Online merchants challenge 43% of credit card chargebacks and recover losses from 39% of those challenges, resulting in a net recovery of 17% of chargebacks, CyberSource Corp. says in a study of online fraud.

Interestingly, the largest percentages of merchants either challenge all chargebacks or ignore all chargebacks, CyberSource says. “It’s very bipolar,” says Doug Schwegman, director of market intelligence. “22% of merchants have a policy to challenge everything, but 28% just walk away.”

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The study of chargebacks was based on a survey of 178 merchants representing about 30 product and services categories, and was included in a broader study of online fraud conducted in October, the Seventh Annual CyberSource Online Fraud Survey.

The study also found that merchant chargeback policies are not very dependent on merchant size or category, though retailers in the $500,000 - $5 million range challenge chargebacks slightly more often than other groups of retailers, Schwegman says.

The retailers in the $500,000 - $5 million range also show the highest net recovery rate, at 26%, CyberSource says.