8 ms·
Curious, but why would Target care too much if the credit card was stolen? My understanding (which could be wrong) was the credit card companies or end users ab
by wamatt 14y ago
Curious, but why would Target care too much if the credit card was stolen? My understanding (which could be wrong) was the credit card companies or end users absorb the losses (depending on circumstances).
- jlgreco 14y agoThe liability for the card holder is limited by law to something like $50. Whether the credit card company eats the loss or wether the merchant gives them the money back depends I believe on how much information the merchant collected about the transaction. My impression is that usually the merchant eats the loss.
- gonzo 14y agoit is almost always the merchant that 'eats' the loss. edit: the credit card companies and merchant banks have the ability to 'reach back' for a number of months.
- 1337Coder 14y agoYou would think so but no. Visa etc and the banks don't want that kind of trouble. To charge cards you need a special bank account called a merchant account. A condition of this merchant account is that if someone issues a charge-back on their creditcard, if the merchant can't prove that the card owner brought the service/product then the funds are taken directly form their merchant account by the bank and then given back to the card-holder. This is why anti-fraud systems are so important to merchants. Case: I steal your creditcard, I buy a tv worth $10, 000. You notice this, and chargeback the merchant. The merchant has to pay you $10, 000 and he lost teh cost price of the tv he sold me (say $7, 000). So by accepting your stolen card as payment, the merchant just lost $17, 000! Source: I build payment gateways.
- pigou 14y agoAren't you double-counting here? On net the merchant only loses the merchandise. The net debit to the merchant's account is zero.
- 1337Coder 14y agoOh yes you are correct. In this case the merchant only loses the cost to the vendor ($7,000). Good catch.
- ceol 14y agoI think they're counting the loss of the merchandise. So a chargeback for a $10,000 TV would be like losing $10,000 plus whatever the cost of the TV was for the store.
- kelnos 14y agoBut it's not. Getting paid $10k and giving it back is net zero.
- bwooce 14y agoNot when you could have sold the TV for $10K. This is the shoplifting issue; the shop loses both the product and the potential profit on the product. It gets a bit existential e.g. can you lose what you never really had? But even if you fall on the NO side of that, the cost of re-obtaining a product is not zero.
- icebraining 14y agoThe cost of re-obtaining the product is $7k, which were already accounted for. Marginal administrative costs are negligible.
- brass9 14y ago$17,000 figure is correct: 1) Store buys TV (COGS = $7K): -$7K 2) Sold TV for $10K. Realized P/L: $3K 3) $10K refunded (chargeback): -$7K 4) TV is gone as well. Inventory: -$7K 5) Potential profit loss: -$3K Total loss: (7+7+3) = $17K
- sokoloff 14y ago1. Store buys TV. -$7000 2. Store sells TV. +$10000, subtotal: +$3000 3. Store pays chargeback. -$10000' subtotal: -$7000 You can't double count the TV, and IMO, you can't count the potential profit loss either, as that's covered once the store buys a replacement TV for inventory. There are fees on top of the above, but the store is out the COGS and fees, not double the COGS, plus the margin.
- solnyshok 14y agoAs former manager of a hypermarket with 170 people team, I need to remind that shop is filming cash registers for many reasons. E.g. to resolve disputes about counting mistakes at the checkout, theft by cashiers, theft by customers.
- frogpelt 14y agoTarget enjoys solving crimes. They have their own forensic lab in Minnesota.
- drusenko 14y agoThe merchant is 100% responsible for these losses, which is why they care so much.
- tatsuke95 14y agoIt's the merchant's duty to ensure that the person who is charging the purchase owns the credit card, which is why they'll often ask for ID along with the CC. A stolen CC is useless if no merchant accepts it.