Stop “Friendly Fraud”: Protect Small Businesses from Outdated 1974 Banking Loopholes

The Issue
As the owner of Slingshot Hitch Factory (SlingshotHitchFactory.com), an American small business that manufactures premium trailer hitches for Polaris Slingshot motorcycles, I experienced firsthand the devastating effects a disputed chargeback can have on a small business. I am also a professional real estate broker with a 25-year career built on integrity.

This was not simply a personal financial dispute. Slingshot Hitch Factory was the merchant involved in the transaction and the business that suffered the financial loss. My experience has opened my eyes to serious gaps in our banking and chargeback system that can make it extremely difficult for small-business merchants to recover funds after merchandise has been delivered and retained.

Friendly fraud, also known as chargeback fraud, can occur when a customer makes a legitimate purchase and subsequently disputes the charge, potentially receiving the money back while retaining the merchandise. Chargeback abuse can leave merchants facing both the loss of their merchandise and the loss of the payment for it.

I recently experienced this situation directly through my company, Slingshot Hitch Factory (SlingshotHitchFactory.com). An international buyer picked up merchandise purchased from my company in the United States. The transaction ultimately resulted in the entire payment of $1,376.31 being reversed while the merchandise remained with the buyer.

Like many other hard-working merchants, I was forced to spend countless hours conducting my own forensic investigation into conduct that I reported to U.S. and Canadian authorities as fraud. This was not simply a customer asking for a refund and returning merchandise. The entire payment was reversed while the buyer retained the merchandise. The hitch had been installed and modified, it was not returned to Slingshot Hitch Factory for inspection, and my position is that the merchandise continues to be retained and used after the payment was reversed.

I gathered and preserved video, electronic communications, metadata, shipping and delivery records, transaction records, photographs, and other evidence documenting what occurred. I filed formal reports with U.S. and Canadian authorities concerning the conduct.

I even manufactured a brand-new replacement component and offered to ship it at my expense if the payment was restored and the original component was returned. That offer was not accepted. A small-business owner should not have to spend countless hours performing forensic investigative work to document a transaction in which the buyer retains the merchandise after the merchant loses the entire payment.

Despite the evidence I submitted during the dispute process, my merchant processor, GoDaddy Payments, ultimately closed the dispute. I believe merchants deserve a meaningful opportunity to have relevant evidence reviewed before a financial dispute becomes final.

When merchants report suspected chargeback fraud, they should not be forced to become their own forensic investigators simply to have their evidence meaningfully considered. Small-business owners have businesses to operate, customers to serve, suppliers to pay, and livelihoods to protect.

What I Changed After This Incident
As a direct result of this experience, Slingshot Hitch Factory has implemented strict new international shipping safeguards. These requirements are now part of the official shipping policy published on SlingshotHitchFactory.com.

We no longer ship international orders to U.S. border pickup locations, UPS Stores, mail-forwarding services, freight forwarders, or other third-party pickup addresses where merchandise can be collected and subsequently transported into another country.

International shipments must ultimately be delivered directly to the customer's verified residential address in the destination country. Before shipment, we require government-issued photo identification and proof of residence, such as a recent utility bill or bank statement showing the recipient's name and residential address. Required customs and broker information must also be provided.

These safeguards create a documented connection between the purchaser, the recipient, the verified residential address, the shipment, and the final delivery destination.

I implemented these requirements because of what happened to my company. I do not want Slingshot Hitch Factory—or another small business—to experience this type of situation without taking every reasonable precaution available.

But individual merchants can only do so much. Small-business owners should not have to discover vulnerabilities in the payment and chargeback system after suffering a substantial financial loss.

Our current systems need stronger verification procedures and meaningful human review when substantial evidence is presented. This petition asks Congress to examine modernization of the Fair Credit Billing Act (FCBA) and related consumer-credit and chargeback protections and to consider establishing a modern Merchant Bill of Rights.

Proposed Reforms
The Modification Bar: Establish clear protections addressing chargebacks involving merchandise that has been permanently altered, installed, repaired, or modified after delivery, particularly when those actions affect the merchant's warranty or ability to inspect the merchandise.

Mandatory Review of Digital Forensic Proof: Require meaningful human review of relevant evidence—including time-stamped video, electronic communications, metadata, shipping documentation, photographs, and tracking records—before a dispute involving substantial contradictory evidence is finally closed.

Accountability and Review Procedures for Payment Processors: Establish clear procedures allowing merchants to seek meaningful review when significant evidence may not have been adequately considered during the dispute process.

This petition is not simply about one transaction involving Slingshot Hitch Factory. It raises a broader question about whether small-business owners who depend upon electronic payments receive a fair opportunity to present and have evidence considered when a transaction is disputed.

I am asking Congress to examine these issues, modernize protections where appropriate, strengthen safeguards against chargeback abuse, and ensure that merchants and consumers alike have access to a fair and evidence-based dispute process.

Your signature can demonstrate support for examining these issues and considering stronger protections for small businesses within the payment and chargeback system.

PLEASE SIGN THIS PETITION — YOU DO NOT HAVE TO DONATE.
THANK YOU FOR SUPPORTING SMALL BUSINESSES AND A FAIRER PAYMENT SYSTEM.