Friendly fraud happens when a cardholder disputes a legitimate purchase, often claiming they didn’t authorize it or didn’t receive what was promised. These disputes may be intentional or the result of misunderstanding. Friendly fraud (also called first-party fraud) is a leading cause of chargebacks, particularly in ecommerce and digital services.
It can be difficult to prove a chargeback is friendly fraud because the shopper was the actual cardholder and verified at the time of the transaction. Since it is challenging to fight these chargebacks and win, it’s often more cost effective to put effort into preventing friendly fraud from happening.
There are dozens of small but impactful updates you can make to your business policies and procedures. And AltoPay offers proven-effective chargeback prevention solutions to keep risk in check.
For more than a decade, Jessica Velasco has been a thought leader in the payments industry. She aims to provide readers with valuable, easy-to-understand resources.
