Merchants feeling the sting of chargebacks.

• Position: Banking

When the Federal Deposit Insurance Corporation disclosed in 2014 that it was withdrawing a list it created of merchant categories that were deemed high risk and warranted heightened attention, it acknowledged that this list was being used by issuing banks as justification to sever ties with merchants who fell into these categories--leaving the merchants scrambling to find a suitable provider willing to process their transactions.

While FDIC maintains that the list was not intended to be used for that purpose, the behavior of the financial institutions show a willingness to eliminate certain risk categories --and the merchants who make their livelihood in them.

Monica Cardone, cofounder and chief operating officer of Chargebacks911, a division of Global Risk Technologies, Tampa, Fla., says that a recent chargeback analysis she conducted, based on issuer behavior for "risky industries"--such as diet products, digital recurring subscriptions, health and beauty, and men's and women's tangible goods--verify that chargeback percentages indeed are higher in these categories than in others. They range from 10% to 20% in the U.S., but run almost double overseas. "Country culture is influencing chargeback behavior, and this is another indication that human influence is an inevitable part of the chargeback trend equation."

She underscores this by saying that it is the consumer who feeds these trends, not the merchant, and that there seems to...