How to become friendly fraud resilient


A growing number of chargeback cases are brought by cardholders who initiate a dispute on a legitimate online charge and claim it’s fraudulent. This is known as first-party misuse or friendly fraud.

One-third of merchants globally said they have experienced friendly fraud, and having to handle them can negatively impact your bottom line. The estimated cost for a business to manage friendly fraud is $35 for every $100 in disputes, according to a recent Verifi white paper titled Sizing Up the Impact of CNP Fraud Disputes.*

According to the Verifi white paper, reasons people initiate a dispute on an online purchase that constitute friendly fraud can include the following.

  • They are confused by the transaction description or amount on their statement.
  • The cardholder is attempting to return goods outside your company’s return period.
  • The quality of the product received was not as expected.
  • They have buyer’s remorse.
  • They want to obtain free goods or services.

There are a number of ways to engage with your customers online in a way that can help lead to fewer disputes.

  • Provide clear online descriptions and photos of your products or services to avoid confusion.
  • Keep customers informed through the order-to-deliver process.
  • Use clear payment descriptors so customers recognize a transaction on their card statement.
  • Make cancellation and return policies clear and easy to find on your website.
  • Include “click to accept” with your cancellation policies before cardholders are able to check out on the website.
  • Obtain a CVV code from the payment card, and use multifactor authentication for account logins to be sure the cardholder and account holder are the rightful card owner.
  • Use an Address Verification Service (AVS). If the shipping address matches the address on file with their card issuer, there is a lower chance the cardholder didn’t receive the goods. 
  • Avoid technical errors and follow card network regulations to help ensure both you and the customer have complete information about each e-commerce transaction.

In general, attentive customer service and clear communication can prevent chargebacks from happening. When customers that are dissatisfied with a purchase know they can easily get assistance from the business, they’re less likely to take their complaint straight to the card-issuing bank.

Check out the tools within Payments Insider to help you manage fraud disputes. Contact your Customer Account Manager for information on ways to protect your business against other types of fraud.

Article Provided by Preferred Payment Partner Elavon


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