Adult Industry Chargebacks
What does it mean to have "adult entertainment products"? The common definition is that if you sell any product that is considered to be obscene, then you are engaged in what is commonly known as the "adult industry". Any type of person who sells any type of "adult entertainment product" is committing a felony - regardless of whether they actually intend to sell obscene items. As defined in United States law, anyone who knowingly sells any type of huge anal toys is an adult entertainment product retailer - regardless of whether they actually intend to sell adult products.
So how do adult entertainment products get manufactured? In general, retailers who want to market adult entertainment products must locate a manufacturer that can process them to the highest and most accurate standards. Most adult entertainment industry merchants do business through independent processing companies. However, there are some independent adult entertainment industry merchants that do business through small, home-based businesses. Either way, these independent adult entertainment products retailers must first apply for a federal tax identification number from the United States Bureau of Alcohol, Tobacco, and Firearms.
Why would adult industry merchants need to get a federal tax identification number? This is so the adult industry, merchants can obtain a government tax identification number that allows them to legally process sales on the Internet. This tax identification number is also used by Internet payment processors such as PayPal and Bank Wire. Both PayPal and Bank Wire chargebacks occur when a customer's credit card is denied because of a chargeback.
A credit card chargeback happens when a customer uses a different credit card at a different merchant site than the one that caused the chargeback. Merchants are not required to investigate why a customer may have opted to pay with a different credit card at their site. But, many adult entertainment industry merchants will chargeback customers if they can prove the credit card was charged at another merchant site. To be able to prove this claim, adult industry merchants must get a hold of the credit card bills for transactions made using these cards. Get in touch with the best online sex toy shop on this page.
They can then perform a manual credit card chargeback or they can charge back the customer's credit card with the IRS.
One of the reasons adult merchants use credit card chargebacks is to prevent fraud. Many banks merchants don't want to do business with an adult entertainment business because it is a high risk high dollar business. Therefore, many banks will not allow adult industry establishments to process credit cards for payment. Also, many banks will not allow adult industry establishments to hold more than one credit card at a time. These factors lead adult merchants to need a system in place that will prevent them from being held accountable for fraudulent chargebacks.
The credit card chargeback issue is a big problem for adult industry merchants and online merchants. It causes a lot of problems for consumers and can cost the adult industry a lot of money. Because of this, some states have passed laws that require adult industry establishments to implement systems to prevent and track chargebacks. Unfortunately, since the implementation of these laws hasn't been effective or popular, many states are now trying to impose heavy fines on adult industry merchants that fail to implement and maintain these systems.
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