If you’ve received a new credit card recently, you may notice something different about it. The addition of microchips is changing the way that card information is submitted and processed, slowly reducing the need to swipe your magnetic strip in retail locations across the country.A Brooklyn criminal lawyer details merchant credit card fraud and why it’s important to defend your charges with a knowledgeable attorney.

Why microchips? Because they have an added layer of security not present on magnetic strips.

In other words, credit card companies hope that they will be able to reduce merchant credit card fraud. And so far it seems to be working. While adding microchips will not eliminate all types of fraud, retail locations and merchants are already starting to see a reduction in fraud cases.

What Is Merchant Credit Card Fraud?

Merchant credit card fraud occurs when a buyer makes any of a variety of unauthorized purchases. Merchants, as well as credit card holders whose information is stolen by a fraudster, are typically the victims of these crimes.

There are many types of credit card and other fraud, but merchant fraud is an issue of debate among attorneys, law enforcement, and merchants because it’s sometimes confusing to figure out liability and repayment. Merchant fraud is often considered a big loss for businesses and merchants due to the losses they acquire from chargebacks and related fees.

What Is a “Chargeback?”

These types of offenses negatively impact merchants because they involve a “chargeback,” or a reversal of payment. When an unauthorized payment is detected, the victim (or sometimes the fraudster) will contact their credit card holder to dispute the charge and suggest a chargeback.

The money is then taken from the retailer and given back to the victim, which leaves the retailer high and dry. On top of that, merchants may also be charged a fee for the chargeback!

Examples of Merchant Credit Card Fraud 

A few examples of merchant credit card fraud include:

  • A buyer uses a stolen or fraudulent card to make a purchase at a retail location. In the case that the card is stolen, the legitimate holder of the card may dispute the charge.
  • Someone purchases an item at a retail store. After leaving the store, the buyer calls their credit card company to dispute the charges (even though they were legitimate). The company refunds the money to the buyer; this means money will be taken away from the merchant.
  • Remember the Target scandal in 2013? Merchant fraud can also occur when information is stolen from a merchant and used to make unauthorized purchases. 

Penalties for Merchant Credit Card Fraud

Since merchant fraud is typically complex and can involve a number of different players and scenarios, charges can be complicated as well. An arrest for merchant fraud may result in the following charges:

  • Wire fraud
  • Bank fraud
  • Identity theft
  • Fraud using an access device
  • Computer fraud
  • Money laundering

These charges can land you up to 20 or 30 years in prison, depending on the value of the goods involved. Additionally, fines can reach up to a million dollars. And on top of that, you may also have to pay restitution to any merchants who lost money or suffered other types of damages from the fraud and chargebacks.

What it boils down to is this: the penalties for these crimes are severe and can completely upend your life. If you want to protect your rights and your future, contact a Brooklyn criminal lawyer today.


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