How Would YOU Solve the Case of the Chilling Chargeback?

AVA, OWNER OF SILVERSTONE Fine Jewelry, had always believed her greatest business asset was trust. For 10 years, her small but thriving jewelry boutique had built a loyal clientele of brides-to-be, anniversary shoppers, and collectors who valued her mix of modern designs and dependable craftsmanship. Most of her sales came from in-person consultations, though she also took online orders.

One rainy Tuesday morning, she received an inquiry through her store’s website from a man named Evan. His profile showed a clean, professional headshot. The message was polite, detailed, and urgent. Evan claimed he needed a high-end diamond tennis bracelet for his wife’s milestone birthday. He was looking for something with at least 10 carats total weight, set in platinum, and ready to ship within the week. He had already browsed Silverstone Fine Jewelry’s online gallery and had a few product links in mind.

Ava responded quickly, sharing high-resolution photos, CAD renderings, and even a short video of her holding the bracelet under bright studio lights. Within minutes, Evan replied via text message, praising the craftsmanship. He insisted he was traveling for work but wanted to complete the purchase immediately to ensure it arrived on time. He offered to pay in full with a credit card, including the FedEx fee for overnight, insured delivery to a condo in Miami.

Ava, mindful of customer experience, processed the payment through her secure POS system. The transaction cleared instantly.

For added security, she required a copy of his driver’s license and shipping address verification. Both pieces of proof arrived via email, within the hour, and appeared legit.

Ava packaged the bracelet, and FedEx picked it up. The next day, Ava received a thank-you text from Evan confirming the package had been received and that his wife would be “over the moon.”

Three weeks later, a chargeback notification arrived from her payment processor.

The cardholder disputed the transaction as unauthorized. The bank’s investigation concluded the credit card had been stolen, and the $18,400 charge was reversed.

The bracelet was gone. And so was the money.

Ava’s first reaction was disbelief. She rechecked the order details and FedEx tracking logs. Everything matched. She had followed the standard precautions recommended for online luxury sales. But the bank’s decision was final, and without proof of in-person ID verification or an official cardholder signature, she had no recourse.

Worse, her merchant account was flagged as high risk. The payment processor informed her that future large transactions could be held for up to 90 days before funds were released. This meant delays for legitimate orders, strained cash flow, and an awkward series of explanations to her regular clients.

Ava joined a private Facebook group for jewelers and found story after story of similar scams: stolen cards, fake IDs, freight forwarders, even “friendly fraud” from real customers claiming their orders never arrived.

Every detail from Evan’s order fit the patterns other retailers had described.

The scammers built rapport. They sent visuals to establish legitimacy. They offered just enough personal detail to seem trustworthy. And once the merchandise was out of the jeweler’s hands, the fraud trail went cold.

Ava’s losses weren’t just financial. The emotional toll of betrayal made her question every new inquiry. She began drafting stricter online sales policies but worried the extra steps would scare off genuine clients. Her staff became jumpy about any order that didn’t involve an in-person handshake. Even smaller online purchases were scrutinized.

Now, with her reputation at stake and her bank unwilling to budge, Ava was left unsure what to do next to resolve the issue with her bank and avoid future scams.

Andrea R.
Carmel, CA

Ava should have had her merchant processing company call the credit card company underwriting bank and gotten a preapproval. In other words, not just the phone number on the back of the credit card, but the actual bank. This could have eliminated her store from being liable for the chargeback from the fraudulent transaction.

Stan G.
Charlotte, NC

Any retailer in business long enough has experienced this scenario. I certainly have. When a new “client” contacts you about shipping with a credit card payment, here’s what must be done:

Call the issuing bank’s fraud department. Your merchant processor can most likely connect you to them or at the minimum give you a phone number. Confirm the account is valid, names and addresses match. Get an email confirmation from the bank that the transaction is legitimate and details of the sale are listed including an approval code. This could take a little time, maybe a working day, but for a multi-thousand dollar sale, it’s worth the effort. If your “client” is pressuring for a quick delivery and needs it right away, it’s fraud, plain and simple!

David B.
Calgary, AB

Been there and been burned. There is no way to protect yourself 100% from this type of credit card fraud. When you accept a card by email or over the phone, you are effectively accepting the responsibility for a fraudulent transaction.

While we are in a business that is based on trust, the world is becoming a very untrustworthy place. Our solution was to stop taking cards by any means other than in person. We moved to accepting e-transfers only.

As for the banking issue, they can write their own rules. Contact your manager or a higher-up and tell them that waiting for 90 days will have a huge detrimental impact on your business. And as it is the first time, you want a second chance before being flagged like this. In any case, the bank did not lose a penny, so you should have some clout. But the other option is being prepared to move your accounts. That may be a hassle but it can show the bank you are not a pushover.

Ken G.
Gladstone, OR

For any non-in-person sale over $500 that will be shipped, here is the email we send to the customer:

“In order to reduce the possibility of a fraudulent purchase, we have put in place the following special requirements for any phone orders over $500. We need to ask that you reply to this email with two photos:

1) High-resolution picture of your photo ID next to your credit card (both must have the same name, and your ID must show the shipping address), and the 3-digit CCV code on the back of the card. If you like, you can cover the first 12 digits of the card (showing only the last 4) and then give us the whole number over the phone.

2) High resolution ‘Selfie’ picture holding the same photo ID next to your face

*Alternatively, you can send payment through the Zelle Digital Payment app without sending any photos. Send payment to this email address: [email protected]

Laura P.
St. Robert, MO

My store’s policy is no transactions unless card and cardholder are present. Even then, an ID might be required. Security is paramount.

Kim H.
Sumter, SC

This is exactly why we never accept credit card sales from people we do not know, over the phone or online. There has been no real way we have found to guarantee them. We explain we need a wire or a cleared check before any merchandise ships. We’ve found that legitimate customers almost always understand this. In our experience, being a smaller locally owned business, it is almost always suspect when someone not local “urgently” needs something and wants it from a small store they’ve never visited.

I’m not sure there is more she could have done except for asking for a different type of payment, or other IDs along with the drivers license and comparing signatures on all. Perhaps also doing an online search for that person and calling any local banks or phone numbers found to see if it was, in fact, that person. I feel banks could be more proactive in putting alerts out more quickly or calling the customer on big purchases such as that one. Some do — they all should.

Jack L.
Lake Forest, CA

In this hypothetical scenario, clearly, the owner of the credit card had not reported it stolen.

So perhaps a call to the credit card company before shipping would have established that the name to which the bracelet was being shipped and the name on the account didn’t match. We are in California. On the rare occasion when we’ve received a phone call from South Carolina or Indiana or Michigan, for example, our radar has activated. After all, why do they need us for a heavy gold chain or diamond ring? There’s a jewelry store on every corner. In this situation, being skeptical can be as important as providing a great (long distance) experience.