Bank cards had gone global, but they still hadn’t gained the widespread acceptance the networks were hoping for. US customers, in particular, were suspicious of this newfangled payment method.

The Federal Reserve Board alleviated some of these fears with The Truth in Lending Act of 1968, or TiLA. This required lenders to provide customers with clear loan cost information. This included the introduction of concepts like annual percentage rate (APR), loan term, and total costs to the borrower.

Now, cardholders were guaranteed to have informed consent before agreeing to the terms of a loan.

TiLA helped protect consumers against predatory lending. Rampant credit card fraud was still an issue, though. This problem drove banks to find a faster, more secure way to process transactions.

IBM introduced a technology that allowed cardholders’ information to be encoded on a magnetic stripe attached to the plastic card. A multiple-day time lag for verifications was reduced to a matter of seconds. While this technology took many more years to become standardized, it was a great step forward for fraud prevention technology.

One provision in the Consumer Credit Act of 1974 — Section 75, to be specific — offers buyers legal protection in the event that a transaction involves the purchase of faulty, damaged, or missing goods.

Purchases of more than £100 in value, but less than £30,000, are eligible for Section 75 protection—debit card purchases are excluded. If found liable, either the merchant supplying the faulty goods, or the consumer’s credit issuer, may bear responsibility, and be required to reimburse the buyer.

We need to emphasize that chargebacks are not the same as Section 75 claims. Chargebacks are voluntary protections extended to consumers by payment networks like Visa and Mastercard, while Section 75 is a legal right.

Even with new safety technology and regulations in place, people still worried that their card could be lost or stolen. They could be left stuck paying for unauthorized transactions. There were also fears of unscrupulous merchants inflating prices or tacking on transaction fees after the fact.

The Fair Credit Billing Act of 1974 attempted to address these issues by creating what we now know as a chargeback. This is where the history of chargebacks begins.

The chargeback option reassured consumers in two ways. First, it strictly limited their liability in the case of fraud. At the same time, it helped keep merchants honest by giving cardholders the ability to fight back against deceptive practices.

The next step in chargeback history is the Electronic Fund Transfer Act. This legislation provided debit card fraud protection that was similar to that of credit cards. However, those protections are not as comprehensive as for credit cards.

The EFTA does limit liability in the event of fraud, but this only applies if the customer reports the incident within the allowed time frame. Also, the regulation does not stipulate repayment of any money withdrawn from the customer’s account.

The CFAA amended the Comprehensive Crime Control Act of 1984 to include criminal penalties for various computer-related cybercrimes. The CFAA prohibited the unauthorized access of protected computers and files, and made it illegal to steal passwords, sell illicitly-obtained data, or install ransomware on protected devices.

Congress enacted the CFAA in response to the proliferation of computer usage in the 1980s. Prior to the Act, no federal law explicitly addressed cybercrime. The law was the first to impose criminal penalties upon individuals who participated in fraudulent or illicit computer-related activities.

Signed into law in May of that year, the Credit Card Accountability Responsibility and Disclosure (Credit CARD) Act of 2009 established a slew of consumer protections. The act guards American borrowers against unclear or deceptive contract language, retroactive interest rate hikes, unfair billing arrangements, and excessive fees.

The Credit CARD Act also established the Consumer Financial Protection Bureau, or CFPB. This is an independent federal agency that supervises and examines financial institutions to ensure that they are in compliance with the law. One of the CFPB’s priorities, for instance, is to protect consumer cardholders’ access to chargeback protection, in line with the FCBA of 1974.

In 2010, accounts of unusual chargeback activity began to be reported by major news networks. Friendly fraud was becoming a serious problem for the first time.

The reasons for this are manifold. But, the main factor was the onset and eventual dominance of eCommerce. In the last decade, friendly fraud became the leading cause of chargebacks, with no signs of an eventual slowdown.

Between 2013 and 2015, a mere seven data breaches exposed personal information from over 6 billion consumers. That doesn’t include the billions of other records exposed in other hacks.

High-profile breaches of companies like Sony, Target, and Equifax became global news stories. Of course, there’s no guarantee that a breach will ever lead to an individual’s data being used by a fraudster. But, in many cases, these breaches gave criminals access to usable information, which was then used to complete counterfeit transactions.

Consumers demanded more protection from fraud. In response, card networks in the US began shifting from magnetic stripes to EMV “chip” cards to protect their interests, as well as those of their customers.

The chip technology in EMV cards is more secure. However, it required merchants to invest in new card readers. As an incentive, the networks began shifting fraud liability to merchants who didn’t upgrade. Essentially they were telling merchants: “You can use old equipment, but if a fraudulent transaction happens, we’ll hold you responsible.”

Recognizing that the legacy chargeback system wasn’t working, Visa rolled out a new dispute process, called Visa Claims Resolution (or VCR). The new procedure sought to close profit-absorbing loopholes, reduce false claims, and improve the customer experience. For merchants, this theoretically meant fewer chargebacks filed. It also meant less time available to respond to the chargebacks that did get filed though.

Mastercard began implementing its own initiative later that year. A similar program to VCR, Mastercard’s changes were to be rolled out in phases through 2020.

The EU General Data Protection Regulation is designed to protect consumer privacy. It limits the way companies are allowed to use and store customer data.

The GDPR promises to reduce the amount of personal information available in the event of a data breach and limits companies’ ability to hold on to said data in the interest of fraud prevention. The full effects of this regulation remain to be seen, but it will impact the history of chargebacks over time.

Mastercard acquired Ethoca, and Visa acquired Verifi. These acquisitions vastly altered major card networks’ approaches to fraud, including friendly fraud. They provided merchants with advance chargeback alerts and improved dispute resolution processes.

These programs are not guaranteed to eradicate chargebacks or their fees. However, they can still be very helpful to merchants looking to prevent chargebacks.