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Merchant sues U.S. Bank over chargebacks, alleges bank covered up breach

Posted on December 8, 2010 by Dissent

Dan Browning reports on a lawsuit in Arizona where merchants are striking back at a bank over chargebacks when the merchant had allegedly done its part to prevent fraud and verify the card’s authenticity.

A tiny mom- and daughter-owned company in Arizona is taking aim at U.S. Bank in a class-action lawsuit that alleges the bank failed to protect them and countless other online merchants from crooks who breached the bank’s credit card database.

In a lawsuit filed last month in Hennepin County and removed to U.S. District Court in Minneapolis this week, the company Paintball Punks alleges that between August and December 2009, it received nine orders totaling $11,259.91 that were fraudulently billed to U.S. Bank-issued credit cards.

[…]

The Arizona firm sells paintball supplies online. It claims that before it shipped out any merchandise, it took all the required steps to verify cardholders’ identities, including checking the security codes on the backs of credit cards and cross-referencing the shipping addresses against the cardholders’ billing addresses on file with the bank.

Read more in the Star Tribune.  Does anyone think the merchant has a chance of prevailing in this type of lawsuit?  And if not, should they have a chance of prevailing?


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