Friendly Fraud

Friendly fraud is when a real customer disputes a charge they authorized. A valid purchase becomes a chargeback. It's called "friendly" because the cardholder filed the dispute, not a stranger using a stolen card. Card networks now often call it first-party misuse.

Why customers do it

• They don't recognize the name on their statement, or a family member made the purchase.
• They regret the purchase and find it easier to dispute than to ask you for a refund.
• They keep the product and claim they never got it.

The transaction was real, so nothing looks wrong when it happens. That makes friendly fraud hard to stop up front.

What it costs

Each chargeback costs you the sale, the goods, and a dispute fee. It also counts toward your dispute rate the same as true fraud. A high dispute rate can put you in a card network monitoring program with extra fees.

How to reduce it

• Use a statement descriptor customers will recognize.
• Make refunds and cancellations easy, so unhappy customers come to you instead of their bank.
• Contest disputes you can prove. You can often win through representment with dispute evidence such as receipts, delivery confirmation, login records, and the terms the customer accepted.
• Respond to new disputes quickly, before the response deadline is close.