When Is Chargeback Fraud a Federal Crime?

 Posted on July 20, 2024 in Fraud

Thirty-three percent of Gen Zers either know someone who has committed chargeback fraud or admit to doing it themselves, according to recent data. Forty-two percent say they would be willing to commit chargeback fraud, and 22 percent of Millennials admit to doing so.

Chargeback fraud is when a customer buys a product and then calls the credit card company to dispute the charge even though it is a legitimate purchase. If the credit card company reverses the charge, it is referred to as a chargeback. In such a case, the customer gets to keep the product without paying for it. On the other hand, the merchant loses the merchandise as well as the money from the sale. The business is also fined by the credit card company for the chargeback.

Chargeback fraud is a form of first-party fraud, which is when an individual misrepresents his or her identity or gives false information to defraud a business or organization. First-party fraud can be treated as a state or federal crime, which this article will explore. To know more about your specific case, speak with an Illinois first-party fraud attorney.

When Is Chargeback Fraud a Federal Crime?

Chargeback fraud or first-party fraud is not itself a federal statute. However, depending on the circumstances, a case of chargeback fraud can become a federal charge. For example:

• If the product was received through the mail, a prosecutor may charge the defendant with mail fraud, which is a federal crime. Mail fraud that affects a financial institution carries up to 30 years in prison and a fine of up to $1,000,000.

• A prosecutor may be able to charge the defendant with wire fraud, which is also a federal offense. Wire fraud is when someone intentionally defrauds someone else using electronic wire communications that cross state lines, like the Internet. Penalties for wire fraud include imprisonment for up to 20 years and a fine of up to $250,000.

• Because chargeback fraud involves several financial institutions, the defendant may be charged with the federal crime of bank fraud, which carries prison time of up to 30 years and a fine of up to $1,000,000.

What Are the Defenses to These Charges?

To charge you with any of these federal crimes, the prosecutor must prove you had intent to commit those crimes. If your attorney can show otherwise, it might be a valid defense.

Other possible defenses include proving the merchant made an error or that your identity was stolen.

Contact a Chicago, IL Chargeback Fraud Defense Lawyer

Some people make the mistake of looking at chargeback fraud as a type of petty theft that may cost you a small fine if you are caught. However, chargeback fraud can be treated as a felony with serious penalties. If you have been accused of chargeback or first-party fraud, reach out to the Law Offices of Hal M. Garfinkel LLC, Chicago Criminal Defense Attorney right away. We fight aggressively to get the best results for our clients and we are ready to start building your defense as soon as possible. Call 312-629-0669 to schedule a free consultation with a Chicago, IL federal criminal defense attorney today.