Can you chargeback prepaid credit cards

That makes it easy for fraudsters to use them for money laundering. They can purchase prepaid cards with stolen funds, then use them to make untraceable purchases anywhere they like. As usage increases and prepaid card products become more sophisticated, we may also see greater use of these cards to conduct criminal activity. According to law enforcement agencies, these cards have already been used in drug trafficking operations and in preparation for terrorist attacks.

However, their most common use is still simple financial fraud. In the U. Of particular interest to fraudsters is the fact that reloadable cards can be used at ATMs, making it possible to convert stolen digital payment credentials into cold hard cash with relative ease.

Instances of hackers compromising the databases of prepaid card systems are becoming more common, especially where issuers have outsourced prepaid card management to third-party processors. Hackers who can gain access to these systems can copy card numbers, inflate balances, and remove withdrawal limits. What this means is that prepaid card fraud can show up in many different forms. The card itself may have been purchased with stolen funds, or the card, while originally purchased legitimately, may have been stolen or copied by a fraudster.

These can result in different dispute scenarios down the line, and it can be difficult for merchants to determine how to identify and prevent these fraud attempts. Because these cards aren't tied to a specific issuing bank or lender, they are hard to track for fraud prevention purposes.

However, many prepaid cards are tied to credit card networks, which provides some level of security. While the dispute and chargeback rules for most payment cards are laid out in the Fair Credit Billing Act and subsequent legislation, these laws do not cover prepaid cards.

All that means is that the Federal government of the United States isn't requiring banks to offer chargebacks on their prepaid cards.

However, card networks like Visa and Mastercard have a vested interest in maintaining customer confidence in prepaid cards, and so they do offer fraud protection and dispute options for customers who purchase prepaid cards carrying their brand name.

Already seeing chargebacks on the rise? We have the solution. No matter the source—credit, debit, or prepaid card chargeback—our combination of proprietary tools and human expertise can deliver the best results possible… period. Skip to content. Types of Chargebacks. You Might be Surprised. Prepaid Gift Card These are open-loop, card scheme-branded cards like a GPR prepaid card; however, these cards are not reloadable.

Payroll Card These are essentially the same as a prepaid debit card, but are issued specifically for the benefit of unbanked employees. Consumer Protection…or a Tool for Fraudsters? Free Download. Chargeback Facts.

Prevent Chargebacks. Fight Fraud. New York State Department of Labor. Consumer Financial Protection Bureau. Rushcard Prepaid Visa. Rewards Cards. Credit Cards. Your Privacy Rights. To change or withdraw your consent choices for Investopedia. At any time, you can update your settings through the "EU Privacy" link at the bottom of any page. These choices will be signaled globally to our partners and will not affect browsing data.

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Read the Fine Print. Monitor Your Card Activity. Getting Rid of Prepaid Cards. The Bottom Line. Key Takeaways Prepaid cards can come with signup fees, monthly fees, individual transaction charges, and more. In April , new protections from the Consumer Financial Protection Bureau went into effect to make account fees more transparent. Article Sources. Investopedia requires writers to use primary sources to support their work.

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