Take Care: “Friendly Fraud” is Widespread

January 22, 2015

9:00 pm

“Friendly” and “fraud” are words that do not really seem fit to be paired together, but the truth is that they often are. “Friendly fraud” happens when customers use a credit card to make a purchase, usually online transactions, and then dispute the charge with their credit card company once the item arrives. Which is the same as saying that they use this to get merchandise for free.

Even though friendly fraud usually has two categories, deliberate and accidental, most cases fall under the first one, when a customer’s actions fall under the definition of friendly fraud. It is quite surprisingly to find that some people seem to find friendly fraud not so wrong: according to data collected by Trustev, 25% of respondents from a survey of 1000 US consumers have no problems with people committing friendly fraud.


Other interesting data from that survey is that 5% of respondents confessed that they have actually committed friendly fraud in the past, while 17% of them said they have disputed credit card charges without contacting the online merchant first. This is very costly to merchants, with reported losses grossing $11.8 billion each year.

Since fraudsters are always looking for new ways of exploiting the systems for their advantage, it is very hard to do anything to stop friendly fraud from happening. Merchants can, however, try to protect their businesses as much as possible, with customer screening presenting as one of the best actions retailers can take to protect themselves.

There are several services available to help on this, like PayPal or 2Checkout, but a simple request for some customer’s information, like photo ID or some utility bill, can be an important first step, as it can be a deterrent for potential fraudsters. Still, such are only preventive actions. Merchants should be further prepared for these situations, by keeping all the documentation about each customer at hand, the product/service that was provided, as well as all contacts made with the customer, which can be helpful when dealing with credit card companies.


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25 y/o, born and living in Portugal. Majored in Biology, but tech and computers were always a passion. Wrote for sites like Windows.Appstorm and MakeTechEasier.

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