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How exactly will a bank make money on a fraudulent transaction? I had my accounts emptied and had the bank give me back everything that was stolen. I fail to see how thousands of dollars being reimbursed is a profitable model.



Your mistake is in assuming the bank is who reimburses their account holders for stolen funds. It's not. Every store your card/account was used at was forced to return those funds to your bank, even if they already provided the products or services that were purchased. They also each had to pay a chargeback fee (usually $15-20).

Say your credit card is stolen, and used to purchase 5 items from 5 stores. Each of those 5 stores will be forced to return all of the money they charged, no matter how impossible it might be for them to know the credit card was stolen. They will also collectively pay $100 in chargeback fees to your bank, which is likely more than it cost to move the couple pieces of paper it took to handle the situation and inform the customer.

The bank has now made a profit.

Each store that accepted the stolen credit card has lost:

- The payment they accepted

- The transaction fees paid on the payment they accepted

- The product they shipped, potentially hundreds or thousands of dollars

- The chargeback fee

And if chargebacks ever amount to more than about 1% of any of those store's transactions, their processing fees can go up, they can have their cash flow abruptly cut as a reserve fund is created to hold their future charges for some time, or they can lose their ability to accept credit cards entirely.


That's not true. This clearly depends on the country you are in, the payment processor you use, and the type of credit card you got. (eg with chip or no chip).


Which part isn't true?

Also chip or no chip doesn't matter for online/telephone/mail order purchases which I would guess would be the only place you can use this stolen credit card info.


That you don't get your money when somebody pays with a stolen card or does a chargeback.


The funds were removed at an ATM in Montreal, there is no store clerk to code 10 the transaction.

--- I now have a 12-digit PIN code.


had the bank give me back everything that was stolen

Actually, that money most likely never made it very far - the businesses where the cards where used almost certainly never saw a cent of it. Worse, they probably still had to pay for the transaction fees (of the now reversed transaction) and a chargeback fee. The bank and any other service providers in the payment processing chain made more money than if the transaction had been legit, and the thief made off with the goods. Yup, accepting payment by credit card sucks.




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