trinorthlighting - 1:02 pm on Mar 17, 2010 (gmt 0)
If you want to stop the consumer to merchant fraud, you have to report it. Yes, the credit card companies will not do anything about it, but you should report it to the Internet Crime Complaint Center because they will follow the lead.
Basically, what will happen if you report it (And the consumer is in the United States) the Internet Crime Complaint Center will pass the lead down to the local authorities. A police officer will go out and knock on the door and ask questions as part of their investigation. Now, you may not see a penny out of it, but if you think about it, if the police are constantly knocking on the same persons door eventually they will be arrested. Plus, when the police knock on doors it might scare the person into stopping the fraudulent chargeback scheme. Most people who commit this crime do it to multiple merchants, so the more reporting that is done, the greater the chance is that the person who is committing the crime will be caught and their operation will be shut down.
My company reports every single instance (Which is only a handful) and we have seen some arrests made due to higher dollar amounts. (Yes, if the local police department is good they do follow up with the merchant). Once you have information on an arrest, you can ask the local prosecutor to attempt to have the person pay restitution to the merchant. Most smaller villages and towns in the United States have no issue doing that. Also, if a person is arrested and the police seize the property under a warrant, when all is said and done, the property will be returned to the merchant because you can legally claim the property.
The more merchants report to the government, they can use that to pressure credit card companies to fight fraud a bit better and we will see an increase in police action taken. If every merchant started reporting fraud, it will do nothing but help other fellow internet merchants and the online community as a whole.