Banks dismiss solid proof as small firms suffer costly chargeback fraud

Australian small businesses are being hit by fraudulent chargebacks despite providing strong documentary evidence, as illustrated by Alex’s case where a customer admitted the dispute was an error yet NAB denied the claim. At a recent Online Retailer Conference in Sydney, Nina Kutzner of the Payment Dispute Institute warned that existing chargeback regulations offer little protection for merchants and need urgent updating.

She explained that banks tend to side with consumers to avoid penalties, and merchants lack a direct avenue to the Australian Financial Complaints Authority. The Australian Banking Association’s Simon Birmingham said the current scheme disadvantages sellers and supports a comprehensive review by the Reserve Bank of Australia. Meanwhile, international card schemes like Visa and Mastercard claim only to set the infrastructure, leaving banks to interpret disputes. With chargebacks projected to rise globally, experts fear the problem will worsen, especially as AI-driven purchasing tools emerge.