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Difficulty: MediumChallenges, Security, and Crime in Electronic Business

An online retail customer completes a legitimate electronic purchase using their valid debit card, successfully receives the ordered goods at their home address, but later files a false dispute with their card-issuing bank claiming the transaction was unauthorized in order to obtain a full refund while keeping the product. Which form of electronic business fraud risk is demonstrated in this scenario?

  1. Chargeback fraudAnswer
  2. B
    Phishing attack
  3. C
    Business-to-Consumer credential spoofing
  4. D
    Indemnity insurance claim failure

Answer

Chargeback fraud
The scenario describes chargeback fraud, which occurs when a buyer makes a legal online purchase, receives the merchandise, and then dishonestly contacts their financial institution to claim the charge was fraudulent or unauthorized in order to obtain a refund without returning the merchandise.

Step-by-Step Solution

1
Analyze the customer action described in the scenario
The buyer completed an authentic purchase and accepted delivery of the goods.
Establishing that the transaction itself was legitimate rules out third-party account takeover or identity theft.
2
Examine the nature of the fraud committed post-delivery
The buyer falsely disputed the payment with the bank to force a financial reversal while retaining the item.
Forcing an unwarranted credit reversal through payment gateways constitutes chargeback fraud (friendly fraud).

Key Concept

Chargeback Fraud and Financial Risks in E-Commerce
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Topics

Challenges, Security, and Crime in Electronic Business

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