We lost a dispute for payment, wondering how to proceed

[JoeK1]

We lost a dispute for a $146 sale, the order was taken over the phone, it's a floral delivery so we have the sender (the fraud perpetrator) and the recipient, then us and Square.  The customer says they "don't remember" sending flowers to their daughter.  First of all Visa and Square should not have awarded this, first of all how would we have gotten the address and recipient as well as the person's credit card?  But now that they did, we are considering sending a letter of explanation and the invoice to the recipient, or contacting the police to see if we can have charges of fraud made, or maybe it's a small claims court issue.  But how do you handle it when your partners Visa and Square unfairly take the side of the fraudster, do you just say it's the cost of doing business or do you pursue it with the recipient of the delivery or the police?   

[Donnie-M]

@JoeK1 I was trying to find my old thread that I answered but I will give you a brief answer here.  #1 if the card isn't dipped/tapped then you will almost always lose a dispute.  This is due to the EMV shift a few years back and has less to do with square but how the banks view "secure" transactions.  The transaction you describe is one of the riskier ones with a card not present transaction.

That said, yes you will lose the dispute.  But, you can absolutely still go after your money.  There is a thing where people "claim" they didn't make a charge and file fraudulent disputes.  I would absolutely send them an invoice and note that payment was dishonored.  I would probably say that the police wouldn't take up a petty theft charge due to the amount.  I think in small claims court you can probably add interest and fees to the claim and showing that the flowers were ordered and sent to her daughter with her card and of course then you can show when she called etc. might be enough to win and the threat of action might be enough.  Or just turn it over to collections are all good options.

[JoeK1]

Thank you for your answer, that makes sense but I still disagree with the decision and the way they do this.  Once before I used a card swiper.  The person did a chargeback just because they knew if they have a chip and the business swipes it's an automatic free opportunity for them to defraud the business.  It's not right that the card companies screw small businesses this way, it's obviously fraud but they side with the fraudsters.  But thank you for your information I really appreciate it. 

[Sam_400º]

I think @Donnie-M has it covered, but also worth noting who makes the final call on these things as it's not Square or Visa but the 'buyers' bank or card company. 

When a dispute is opened the request goes from the buyer, via their card company to Square then on to you. The evidence you supply is sent back via square to the card company. It's an interesting way of doing it as generally the card companies will be interested in keeping their customers happy. 

By operating Square has to abide by this system, and we have to accept the way it works too to be able to take payments this way.