How much does it really cost to fight a fraudulent charge on your credit card bill? Some companies count on you thinking that getting a wrong charge removed will take so much time and hassle that you might consider just letting it slide. Other companies think you won't even notice their transaction on your account, especially if you use a corporate credit card.

Credit card chargebacks

Legitimate merchants hate chargebacks. For small-business owners, fighting a chargeback can cost as much as $35 per disputed charge. Some credit card processors will kick merchants off their networks for as few as three unsuccessfully disputed transactions in a month. Crammers and scammers use multiple credit card processors to minimize their risk of getting caught.

That's where Operation Short Change comes in. In 2009, the Federal Trade Commission launched an all-out assault on scammers, shady operators and misguided merchants. The project focused on rooting out merchants that thrived on small, regular charges to credit cards or checking accounts. So far, investigators have shut down a series of operations including:

  • A "closeout clothing club" that charged credit cards and bank accounts every month, even after customers returned low-cost clothes and household goods.
  • A "job certification center" that charged up to $98 each year to certify consumers to apply for janitorial and maintenance jobs that didn't actually require any pre-registration or certification.
  • Many "free government grant" locator services that charged monthly fees for repackaged versions of freely available government documents.

According to government reports, many of the operators accused of fraud have chosen to return consumers' funds and to promise to stay out of the direct marketing industry. Other defendants haven't fared nearly as well at trial, including one online marketer that has been banned from ever accessing a customer's bank account again.

How to reduce chances for fraud

Despite government intervention, consumer advocates still warn Americans to follow a few common-sense tips when reviewing promotional offers:

  • Consumer protection bureaus recommend using credit cards instead of debit cards or checking account details when shopping online. Credit cards offer stronger protection against fraudulent activity, while preventing merchants from emptying bank accounts.
  • Remember that a company may have recently changed its identity, making it hard to track down negative reports from the Better Business Bureau or from state Attorneys General.
  • Cramming companies often use compelling websites and infomercials to convince you of their legitimacy. If a service promises anything that seems too good to be true, it probably is.

Your credit card company doesn't like cramming, either. Some credit card processors launch internal investigations after responding to multiple customer complaints about common vendors. Selecting a bank with a strong fraud prevention department can keep you from having to wait for an FTC investigation to get your money back from a scam artist.