Friendly fraud: Aussie business owner reveals how fraudulent chargebacks are “killing” SMEs

The founder of Australian e-commerce jewellery store Desiderate Jewellery says fraudulent chargebacks are “killing” small businesses at a time when many are already hurting, with her family-owned business already losing $5,000 to chargebacks this year alone. 

Chargebacks are defined by the Commonwealth Bank of Australia as “like a refund, where a transaction made on a debit or credit card is reversed”. 

A chargeback usually occurs when a cardholder, or customer, disputes a payment because they believe it is invalid or unauthorised. 

However, sometimes a chargeback can be fraudulent. Also known as friendly fraud, this is where someone makes a purchase and then requests a refund by declaring they have never received the items, or the goods are not as described on a business’s website.

Last Tuesday, Janine Leghissa, who founded her NSW-based online jewellery store Desiderate Jewellery in 2017 and also owns fashion brand Taleeta, revealed on LinkedIn that such chargebacks are “killing” her small business after they cost her over $1,000 the week prior.

She asked other e-commerce business owners how they were handling the issue.  

“Customers claim they never received the parcel, then open up a chargeback with the bank,” she wrote.

“Then the bank refunds their money — but they have the product.

“One...