What does Friendly Fraud look like? How’s it different from Chargeback Fraud?
Friendly Fraud typically happens when your customer is not satisfied with your product/service; some examples could be the shipment didn’t reach in time or there was a discrepancy between what was agreed upon to that of what was delivered.
When the customer is honest about the reasons for the chargeback claim, it is deemed a ‘friendly fraud’. But in recent years, after the surge of e-commerce and cloud products, the occurrence of such friendly frauds have risen. Fraudsters and cyber attackers use this dispute process to claim a chargeback despite having received the goods/services. Such dispute claims with malicious intent are labeled as Chargeback Frauds.
The effects of such fraud are beyond just the cost of goods. There are other additional implications such as:
Additional chargeback fees.
Loss of transaction fees.
Overhead expenses to dispute charges.
The threat of being listed as a high-risk merchant.