The recent court decision regarding chargeback liability in e-commerce sets a significant precedent for the sector. The São Paulo Court of Justice (TJSP) determined that the responsibility for chargebacks must be shared between the seller and the credit card issuer, a decision that may have broad implications for e-commerce in Brazil. The information is from the website Strategy.
The Case
The case involved a dispute between an online seller and a credit card processor. The seller contested the exclusive responsibility for the chargeback, arguing that the administrator should share the risks and costs associated with fraudulent transactions. A chargeback occurs when a purchase is disputed by the cardholder, resulting in the reversal of the transaction and the refund of the amount to the consumer
The Decision
The TJSP decided that the responsibility for chargebacks must be shared, based on the principle of good faith and the need for balance in commercial relationships. The decision highlighted that both the seller and the card administrator have fundamental roles in fraud prevention and, therefore, they must share the risks and costs arising from fraudulent transactions
Implications for E-commerce
The decision of the TJSP establishes an important precedent that may influence future disputes over chargebacks in e-commerce. For online sellers, the decision may mean a reduction in the financial burdens associated with fraudulent transactions. On the other hand, credit card issuers may need to review their security and fraud prevention policies to mitigate risks
Industry Reactions
The decision was met with mixed reactions in the e-commerce sector. Some online sellers celebrated the decision, seeing it as a fair measure that recognizes the challenges faced by companies in combating fraud. On the other hand, representatives of credit card issuers expressed concerns about the impact of the decision on their operations
Challenges and Opportunities
The decision of the TJSP also raises questions about the need for improvements in security practices in e-commerce. Collaboration between sellers and card administrators can be crucial for developing more effective solutions against fraud. Furthermore, the decision may encourage the development of new security technologies and the adoption of better practices in the sector
