One of the major advantages of buying a product or service with a credit card is the “chargeback” – the process that allows the customer to dispute a charge if the transaction is not completed satisfactorily.

But now, a New York company plans to change all that. US Digital Transactions Corporation (USDT) is lauching a “chargeback recovery service” that it says is aimed at combating “friendly fraud” by intimidating customers into paying and threatening to damage their credit rating if they don't.

“'Friendly fraud" occurs when a consumer, without a valid reason, refuses acceptance of the charge for a transaction they performed and reports the false claim to their bank/card issuer requesting a refund or chargeback,'” the US Digital said in a press release today.

The company claimed that about 20 percent of the $138 billion in annual credit card fraud is attributed to friendly fraud and said honest merchants are often the victims.

"Chargebacks can be the most frustrating aspect of a business. The merchant must comply with regulations set forth by the card associations to refute the chargeback and most often the merchant ends up losing the revenue. A merchant can also lose their ability to accept credit/debit cards if the percentage of chargebacks is too high," said Greg Wooten, US Digital CEO.

USDT said it would offer businesses both “soft and aggressive options for revenue recovery.”

The “soft” option would consist of “an easy-to-use, fully automated and economical flat fee collection service whereby a merchant sends a series of time-tested debt collection letters to the debtor and receives 100% of all collected revenue. This option will additionally report the debt to all three major credit bureaus.”

The company's press release didn't spell out what the “aggressive” option would consist of.