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cookiesarenomnom t1_iusxx30 wrote

Reply to comment by IamLars in PSA: Employee at The Ashford stealing credit cards by gamerdudeNYC

They don't. If it's under a certain amount, they don't investigate. They refund your money, send you a new card and write off the loses. It's far cheaper and quicker than investigating for a measly $500(from their perspective). They only investigate when fraud happens in the thousands of dollars.

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ip3p t1_iuthxw1 wrote

They don’t investigate because it’s not their money to lose. Fraudulent charges for online (card not present) transactions end up being covered by the merchant who accepted the card, the banks don’t cover anything in that case.

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HElGHTS t1_iuu5rj4 wrote

Can merchants use insurance to guard against this, or would that just increase the expected value of their losses even more (in exchange for turning a variable cost into a fixed cost)?

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ip3p t1_iuutidl wrote

It's mostly used by larger merchants, but there are services that do essentially that. The services analyze the transaction and will approve/deny it based on fraud risk. Denied transaction they won't cover if a 'chargeback' occurs.

The cost is usually a fixed percentage of the transaction, usually ~1% but can be higher and lower depending on the risk level of the industry.

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