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Originally Posted by warrrreagl
Why does a business care if the card is stolen or not? Does the business have to give the money back if it turns out to have been stolen? Or is this an example of superb customer service?
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Yes, the merchant is often liable for fraudulent charges. As with almost everything else related to the credit industry, the merchant both pays the fees and carries all the risk.
If I call my credit card company and tell them there's a charge on my bill that I didn't pay for, the credit card company issues a "chargeback" against the merchant, and the merchant then has to defend themselves against the claim. If they can't satisfactorily justify the charge, they lose the merchandise and the money. So many merchants institute a policy of checking ID on all credit card transactions, so they can tell the credit card issuer that they did that.
There are banks and providers now that limit a cardholder's liability, and they divvy up that risk with the merchant, but any way you cut it, credit cards are risky for merchants.