Consumer fraud is not a major source of chargebacks

[NetRodent]

In this industry you hear a lot of complaints about how easy it is for a customer to chargeback. Often these complaints are followed by implications that savy consumers know they can join a site, view all the content and never have to pay a dime. In light of the new Visa 1% rule, I've been doing some analysis of our recent chargebacks and it seems like cardholder fraud isn't the problem.

Our chargebacks from June can be broken down as follows:
21% - members never logged in
60% - members not logged in during period charged back
13% - members logged in two times or less during during period charged back
6% - members logged in more than twice during period charged back

Only 6% of our June chargebacks came from people who were actually using the site. Even if you assume that all of these are cardholder fraud (instead of stolen cards) it doesn't seem like a significant number.

In a sense its good news that 81% come from people who aren't using the site. People shouldn't be paying for services they aren't using, so it seems that by monitoring inactive accounts a large percentage of chargebacks could be avoided.

Interestingly, it also seems that members who never logged in were much more likely to have supplied a bogus looking email address. I don't have stats to support this last assertion, just a gut feeling.

I'd be very interested to see if anyone else has done a similar analysis.