Friendly fraud, also known as chargeback fraud or first-party fraud, is when a legitimate customer contacts their credit card issuer to dispute a charge, claiming they did not authorize the purchase. This can be costly for businesses, as they may be forced to refund the customer and eat the loss.
According to Stripe, friendly fraud cost merchants an estimated $35 billion in 2022. This number is expected to grow to $45 billion in 2024.
There are a few things businesses can do to protect themselves from friendly fraud:
- Document the purchase. Keep a copy of the order confirmation, shipping confirmation, and any other relevant documentation.
- Contact the customer to try to resolve the issue. This may involve offering a refund or replacement product.
- Dispute the charge with the credit card company. This will require providing evidence that the purchase was legitimate.
- Use a fraud prevention solution. There are a number of fraud prevention solutions available that can help businesses identify and fight friendly fraud.
For more information on friendly fraud, please see the following article: What is Friendly Fraud?: https://stripe.com/resources/more/what-is-friendly-fraud
In addition to the tips mentioned above, businesses can also take the following steps to reduce their risk of friendly fraud:
- Use strong passwords and security measures. This will help protect your customers’ accounts from unauthorized access.
- Be transparent about your return and refund policies. This will help set expectations for your customers and reduce the likelihood of friendly fraud disputes.
- Monitor your chargeback rates. If you see an increase in chargebacks, it may be a sign of friendly fraud.
By following these tips, businesses can help protect themselves from friendly fraud and reduce their financial losses.
Here are some additional tips for fighting friendly fraud:
- Be aware of the signs of friendly fraud. Some common signs of friendly fraud include:
- The customer disputes the charge shortly after making the purchase.
- The customer provides inconsistent or inaccurate information about the purchase.
- The customer has a history of disputing charges.
- Take steps to verify the customer’s identity. This may involve asking for additional information, such as the customer’s billing address or phone number.
- Dispute the charge with the credit card company. If you believe that the charge is fraudulent, you should dispute it with the credit card company. This will require providing evidence that the purchase was legitimate.
- Use a fraud prevention solution. There are a number of fraud prevention solutions available that can help businesses identify and fight friendly fraud.
Interested in learning more about how Kombatix can help you fight friendly fraud? Sign up for our beta today and get started for free!
Kombatix is a fraud prevention solution that uses machine learning and a team of fraud experts to identify and fight friendly fraud. We are currently in beta and are looking for businesses to help us test and improve our product.
As a beta tester, you will have access to all of the features of Kombatix, including:
- Real-time friendly fraud detection
- Dispute management
- Customer risk scoring
- And more!
We are also offering a free trial to all beta testers. This means that you can try Kombatix risk-free and see how it can help you fight friendly fraud.
To sign up for the Kombatix beta, please visit our website and fill out the form. We look forward to hearing from you!
Here are some of the benefits of signing up for the Kombatix beta:
- Get early access to the latest features and functionality
- Help us shape the future of Kombatix
- Receive free support from our team of experts
- Be one of the first businesses to benefit from Kombatix’s fraud prevention capabilities
