When there is a chargeback that emerges out of a legitimate transaction is known as Friendly Fraud. Generally, this happens when the customer after purchasing the product regrets that transaction or when the customer doesn’t recognize such transaction in their bank statement, then the customer may contact the bank directly and ask for reversing the charge and the bank does refund the charge believing that the actual fraud has occurred. The customer without going to the merchant and asking about the charge or refund directly asks the bank about the charges.
These kinds of frauds are becoming a serious issue to the merchants and it is increasing day by day in industries like digital goods. Hence, Ethoca friendly fraud prevention gives the precautionary measures to solve this vital problem.
Friendly and Normal Fraud Differences –
In a normal fraud, the perpetrator hides his identity and uses a stolen identity to get access to a credit card, for any personal or financial benefit of someone else. Whereas in friendly fraud the person doing the fraud is the cardholder only, one who has the authority of using the card, such as a family member or someone else who has got hold of that card but isn’t the user who has any authority to access the card information.
Prevention of Friendly Fraud –
Prevention from friendly fraud can be difficult as all the transactions will lead to potentially valid transactions.
Still, some of the preventive measures can be taken to effectively reduce the occurrence of friendly fraud and combat it, that is:-
- Ensure that the descriptors used by the merchants are easy to understand –
One of the major causes of such chargeback is that customers are not able to recognize the charge that is showing on the bank statement. If the merchants use descriptors that are easy to understand for the customers showing their business or store name then they can easily identify the origin of the transaction being made.
- There must be realistic expectations related to the products or services –
The merchant should not deceive the customers by saying that the products or services have doors quality when it doesn’t. This misleads the customer and they also feel dissatisfied to be deceived like this and so they don’t want to get back to that merchant. Fraud is a two-way process one can’t expect to be treated by the customers ethically if they don’t act ethically themselves.
Hence there are numerous methods that the merchants are the sellers can adopt to prevent friendly fraud. If there is a collaboration among the merchants and sellers they can get help from the CNP fraud detection who can deflect these types of claims by giving detailed order information to the customer on the phone before any such fraud is claimed.