Chargeback Insurance Yes or No?

A recent dealer who contacted us described the following scenario:

‘A customer came into his business and bought $12,000 worth of tires with a stolen credit card. The card went through as it had not been reported stolen and the buyer owned $12,000 worth of tires. Several days later, the dealer was notified that the credit card had been stolen prior to the purchase; thus, no $12,000 payment to our dealer.’

The dealer contacted us in hopes there was some sort of coverage for his loss under his garage liability contract; there was not. He referred to his loss as a chargeback and inquired as to where such insurance would be available, assuming it is available.
I am sure we are all familiar with chargeback insurance as it relates to the typical credit card transactions. In those cases, the bank backing the credit card and/or the bank with whom the dealer uses is the first line defense. But, a stolen credit card may include false identity, or other extenuating circumstances.

In an effort to assist our client, we did some investigation as to how dealers may protect themselves from ‘chargebacks’. This is not an area of insurance with which most agents are familiar and we are among ‘most’ agents when it comes to this rather fringe-like insurance that may be needed by some Texas Non-franchised Auto Dealers.