Not stopped, but it would decrease fraud, as the fraction of payments made in bitcoins is guaranteed to be impossible to charge back.
As this fraction increases, fraud is reduced further and further.
It would be interesting to have a payment platform that evaluates the trustworthiness of a customer right before payment (based on factors such as customer history, shipping address matching the billing address...), and force those deemed "risky" to pay in Bitcoins. It could even handle CC authorization failures: "credit card declined? No problem, pay in Bitcoins instead."
Wouldn't the fraction of people paying with Bitcoin be a subset of the people that didn't commit fraud with credit cards? You're just moving a very small number of honest buyers from credit cards to Bitcoin.
You not going to have a person not defraud you because you provided the option of Bitcoins. If you have transaction that you deem risky, require a bank transfer, that will make it easier for the criminals to go commit fraud somewhere else.
Cash has no chargebacks, which is why merchants will often offer a small discount for using cash (or charge a .50 fee) when using a credit card. Bitcoin is just like cash, but digital. Some merchants even offer discounts for customers who use bitcoins since the risk is mitigated, as with physical cash.
Based on the comments above (http://news.ycombinator.com/item?id=5259876), it seems like Bitcoin is just allowing merchants to kick the chargeback risk down the road to the Bitcoin exchanges.
> Not stopped, but it would decrease fraud, as the fraction of payments made in bitcoins is guaranteed to be impossible to charge back.
I doubt it. Most fraudsters are trying to convert someone else's credit into cash by buying goods they can sell. If you have a bitcoin, you pretty much already have cash - just use one of the exchanges.
