The modern day fraud crippling firms | The Business | ABC NEWS
After reporting that several small fashion businesses were the victims of fraudulent chargebacks, the ABC now understands it is happening to businesses in other sectors. One business owner fears she may have to close her tanning salon, while a local painter has lost hundreds of dollars. With online payments making up almost half of online sales, industry experts are concerned fraudulent chargebacks are crippling businesses already struggling with higher costs from the war in the Middle East, and soon-to-be debit and credit card surcharge bans. A chargeback happens when a customer lodges a claim with their bank, saying an item they paid for by card was damaged or did not arrive. It can be difficult for business owners to dispute the claim if they disagree. Every time a chargeback dispute is lodged, the small business is charged a fee on top of having to refund the customer. According to Mastercard, the average chargeback amount for merchants in Australia is $91, which payments expert Brad Kelly says often is not worth disputing. He also says banks do not want to upset their cardholders and risk a fine from the financial regulator AFCA. “The bank would make a decision and say, ‘OK, if we just refund this dispute and the cost to us to go to AFCA is $500 or $1,000.’ That’s a purely economic decision” Mr Kelly said. The Australian Banking Association said it was time for a review of regulations “to better promote honest conduct and protect the interests of both buyers and sellers.” An online petition with more than 1,600 signatures is calling on the government to provide better protection against fraudulent chargebacks. In a statement, the Minister for Small Business, Anne Aly said “we recognise many hardworking small businesses are being left out of pocket when claims are misused … We will continue to monitor this issue closely and consider whether current laws and industry settings are striking the right balance.”
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Read more here: https://www.abc.net.au/news/2026-05-04/fraudulent-chargebacks-hit-small-businesses-financial-pressure/106479208
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