Friendly & Chargeback Fraud: Key Differences and Prevention Strategies
In the realm of online commerce, fraud is an ever-present threat that can significantly impact businesses. Two prevalent types are friendly fraud and chargeback fraud. While they may appear similar, they differ in intent, execution, and prevention methods. What is Friendly Fraud? Friendly fraud occurs when a legitimate cardholder disputes a transaction despite having received the goods or services. This often stems from misunderstandings, forgetfulness, or unauthorized use by family members. For instance, a family member might use someone's credit card without informing them, leading to a chargeback request. Although unintentional, it results in financial losses for businesses, including the sale amount and additional fees. What is Chargeback Fraud? Chargeback fraud , also known as cyber shoplifting, is intentional. Here, a customer makes a purchase, receives the product, and then falsely claims a refund, asserting issues like a stolen card. This deliberate act is often part of ...