⚠️ Disclaimer: This guide is offered in good faith as a potential approach to addressing chargeback fraud. It is not a guarantee of any specific outcome. By following this guidance, you acknowledge that you are doing so at your own risk. We are not liable for any outcomes resulting from the actions described below. |
Overview
Chargebacks are a reality for any business that accepts credit card payments, and laundromats are no exception. However, not every chargeback is the result of fraud. Understanding the different types of chargebacks — and the customers behind them — is the first step toward addressing the problem effectively.
Part 1: Understanding Chargeback Types |
Type 1: The Legitimate Customer
This customer has a genuine complaint. They may have experienced a machine malfunction, been double-charged, or simply feel the service didn't meet their expectations. Their name will typically match the card on file, and the chargeback is likely a one-off occurrence.
What to do: Reach out to this customer directly. Have a conversation to understand what happened and whether it can be resolved without escalating further. In many cases, a refund or goodwill gesture will close the dispute amicably.
Type 2: The System Abuser
This customer understands how the chargeback process works and uses it to their advantage. They may have legitimately used your machines but dispute the charge anyway, knowing that small businesses often can't fight back effectively. Their card information will match their identity, but the pattern of chargebacks may feel suspicious.
What to do: Document these cases carefully. If the pattern continues, you may be able to dispute the chargebacks with supporting transaction data and timestamps showing legitimate machine usage.
Type 3: The Credit Card Fraudster
This is the most serious type. These individuals are using stolen or cloned credit cards — often obtained via card skimmers — to pay for machine cycles. Because the cards haven't yet been reported stolen, standard fraud detection may not flag them. Key indicators include:
Multiple different cards used in a short period
Card holder names that don't match the person's ID
The same individual appearing on camera using different payment methods
A cluster of chargebacks tied to the same machine or time window
What to do: Follow the step-by-step process outlined in Part 2 of this guide.
⚠️ Warning: If it’s a credit card fraudster (stolen/cloned cards), it’s important to set expectations: the real cardholder is typically going to be made whole by their bank, and trying to “win back” funds via disputes can be low-ROI for operators—so your time is usually better spent documenting patterns, pulling footage, and building an evidence package for law enforcement to stop the behavior at the source. With a legitimate customer, though, it’s often worth attempting contact first—understand what went wrong (malfunction/double charge/poor experience) and resolve directly when possible (refund or goodwill), which can prevent repeat disputes and preserve the relationship. |
Part 2: Step-by-Step Response to Chargeback Fraud |
If you are experiencing a significant volume of chargebacks and suspect fraudulent activity, follow these steps in order.
Step 1: Document All Chargebacks in a Spreadsheet
Create a spreadsheet with one row per chargeback. Include the following columns:
Chargeback date — the date the chargeback was filed
Transaction date — the date the original payment was made
Transaction amount — the dollar amount disputed
Credit card number (last 4 digits) — to identify repeat cards or patterns
Machine number or ID — which machine was used
Any notes — e.g., cardholder name, card type
Once your spreadsheet is complete, send it to us. We will review the data to identify patterns, flag suspicious activity, and provide you with precise timestamps showing when and where each transaction occurred.
Step 2: Review Your Security Footage
Using the timestamps we provide, pull your security camera footage for the relevant machines during the relevant time windows. You are looking to:
Identify the individual using the card
Capture clear footage of their face and appearance
Document any instances of the same person using multiple different cards
Note any accomplices or patterns in their behavior
This footage will become a critical piece of your evidence package.
Step 3: Build Your Evidence Package
Once you have identified a suspect, compile the following into a single organized file:
Video footage clearly showing the individual using the machines
Transaction records showing multiple cards used with different names
Your chargeback spreadsheet with all relevant dates and amounts
Any additional documentation showing the card information does not match the individual's identity
Having all of this organized and ready is essential for the next step to be effective.
Step 4: Brief Your Staff
Share the suspect's image with all staff members and train them on what to do if this person returns. Make sure your team knows:
How to identify the individual
Not to confront them directly
To call the police immediately if the person is spotted
Where the evidence package is located so it can be handed over quickly
Step 5: Contact the Authorities
When the suspect returns, have your staff call the police right away. Provide law enforcement with your complete evidence package. With documentation showing that the same individual used multiple credit cards under different names across multiple transactions, you have strong grounds for a fraud report and potentially an arrest.
Without taking these steps, fraudsters who discover they can use stolen cards at your machines without consequence will continue to do so — and the problem will likely grow over time.
Need Help?
If you have compiled your chargeback spreadsheet and are ready to send it over for review, or if you have questions about any of the steps above, please reach out to our support team. We are here to help you identify patterns and make sure you have everything you need to take action.