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 Kount, 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://kount.com/blog/what-is-friendly-fraud
Products like Kombatix use machine learning algorithms and a team of fraud experts to identify patterns of friendly fraud and help businesses reduce friendly fraud losses. Kombatix can also help businesses dispute charges with the credit card company and protect their business reputation.
Here are some specific ways that Kombatix can help merchants fight friendly fraud:
- Identify patterns of friendly fraud: Kombatix uses machine learning algorithms to identify patterns of friendly fraud, such as customers who frequently dispute charges or who have a history of returning items.
- Dispute charges: Kombatix can help businesses dispute charges with the credit card company. This can be a complex and time-consuming process, but Kombatix can help businesses gather the evidence they need to dispute the charges successfully.
- Protect business reputation: Friendly fraud can damage a business’s reputation. Kombatix can help businesses protect their reputation by providing them with the tools and resources they need to fight friendly fraud.
By using a product like Kombatix, merchants can help reduce their risk of friendly fraud and protect their financial bottom line.
