Fraud Card-Present Chargebacks: EMV Chip & Liability Shift

Card-present fraud disputes claim an in-person transaction was unauthorized despite the physical card being present. With EMV chip readers, liability shifts to the issuing bank. Without EMV, you bear full liability.

EMV Liability Shift

Using EMV chip readers shifts fraud liability to the issuing bank. This is your strongest defense against card-present fraud disputes.

What “Card-Present Fraud” Means

This dispute occurs when:

• A cardholder claims an in-person transaction was unauthorized
• The physical card was present but allegedly stolen or counterfeit
• Transaction occurred at a physical terminal (not online)
• EMV chip was or wasn’t used

Key distinction: Physical card was present, unlike card-not-present fraud.

Common Triggers

• Stolen cards used before cardholder reports theft
• Counterfeit cards (rare with EMV)
• Mag stripe fallback when chip reader unavailable
• No EMV chip reader used (liability on merchant)

How Banks Evaluate Card-Present Fraud

Issuers check for EMV chip usage. Their decision process:

1. EMV chip: Was the chip read and verified?
2. Liability shift: If EMV used, liability is on issuer
3. Mag stripe: If mag stripe used, liability is on merchant
4. Signature: Was signature captured and verified?

Default position: With EMV, liability shifts to issuer. Without EMV, you lose.

Win Likelihood: High with EMV, Low without

Win probability: High (with EMV) | Low (without EMV)

Evidence That Wins

✅ EMV chip transaction (automatic liability shift)
✅ Signature match to cardholder’s signature on file
✅ ID verification (photo ID checked)
✅ Security footage showing cardholder
✅ PIN verification (for debit cards)

Evidence That Rarely Works

❌ Mag stripe transaction (no liability shift)
❌ No signature captured
❌ No ID verification
❌ Chip reader not used when available

Freeze Risk Assessment: Medium-High

Freeze risk: Medium-High

Why card-present fraud is risky:

• Fraud rate impact: Counts toward fraud rate if you lose
• EMV compliance: Not using EMV signals poor security
• Pattern recognition: Multiple card-present fraud disputes trigger monitoring

Prevention: Use EMV Chip Readers

EMV Compliance

1. Use EMV chip readers for all card-present transactions
2. Never fallback to mag stripe if chip is available
3. Require PIN for debit card transactions
4. Check ID for high-value purchases
5. Capture signature as backup verification

Liability Shift Rules

With EMV chip:

• Liability shifts to issuing bank
• You typically win fraud disputes automatically

Without EMV chip:

• You bear full liability
• You will likely lose fraud disputes

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Decision Framework

1. Check EMV usage: Was chip reader used?
2. Review liability: Does EMV shift liability to issuer?
3. Assess evidence: Do you have signature or ID verification?
4. Act fast: Fight with EMV proof, accept without EMV

Assess Your Dispute Risk (30 seconds)

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Related guides: Unauthorized • 10.4 Fraud • Fraud Card-Not-Present