DECA Marketing Cluster Practice Exam

What term describes a retailer's obligation to cover losses from fraudulent transactions?

1. Scrambled Merchandising

2. Chargeback

3. Credit Recovery

4. Direct Selling

The correct answer is: Chargeback

The term that describes a retailer's obligation to cover losses from fraudulent transactions is indeed chargeback. A chargeback occurs when a customer disputes a transaction, typically due to reasons such as fraud, unauthorized use of their credit card, or dissatisfaction with a product or service. In such cases, the financial institution or credit card issuer may reverse the transaction and return the funds to the customer, charging the retailer for the amount. This mechanism serves to protect consumers, but it also places the financial burden on the retailer, highlighting the importance of fraud prevention measures and secure transaction processes in retail environments. Understanding chargebacks is crucial for retailers to manage potential losses effectively and maintain good relationships with payment processors and banks.