[jlgreco]

The liability for the card holder is limited by law to something like $50. Whether the credit card company eats the loss or wether the merchant gives them the money back depends I believe on how much information the merchant collected about the transaction. My impression is that usually the merchant eats the loss.

[gonzo]

it is almost always the merchant that 'eats' the loss.

edit: the credit card companies and merchant banks have the ability to 'reach back' for a number of months.