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Chargeback insurance is an insurance product that protects a merchant who accepts credit cards. The insurance protects the merchant against fraud in a transaction where the use of the credit card was unauthorized, and covers claims arising out of the merchant’s liability to the service bank.
This coverage can apply under a number of circumstances, including:
- The illicit use of a lost or stolen credit card before the loss or theft is reported by the cardholder.
- The use of credit card number generators or counterfeit plastic cards
- Post-purchase changes to "ship to" information
- Signature mismatch or signature not on file.
A merchant claiming under a chargeback insurance policy may be reimbursed for:
- The cost of a stolen product or service
- The loss of profit