Accidental Friendly Fraud

March 7, 2022 | 10 min read

Accidental friendly fraud

Accidental Friendly Fraud: The Pain of Unintentional Chargebacks

Do you ever feel like your customers are out to get you?

It can feel like that’s the case after you get inundated by chargebacks and fraud. It’s even worse when you start digging into those disputes and discover that most claims are inaccurate or misstate the circumstances. After a while, you might wonder if you should take it personally.

The truth is that most invalid chargebacks are unintentional. Usually, the cardholder genuinely believed they had good reason to dispute a charge.

The buyer is not trying to hurt your business. In fact, they may not even realize that a chargeback was filed at all. Regardless of what the buyer intended, the end result is the same.

In this post, we’ll take a look at accidental friendly fraud. We’ll see how it differs from other chargeback sources and examine what you can do to protect your business.

A Quick Rundown on Friendly Fraud

There are dozens of fraud sources you need to be aware of. Criminal fraud threats like identity theft tend to get a lot of attention. However, most fraud incidents fall under the category of friendly fraud.

Friendly fraud occurs when a customer files a chargeback without a valid reason. The distinguishing element of friendly fraud is that it isn’t committed by a professional criminal. Instead, it comes from one of your own customers.

For example, the buyer might have an issue with their purchase and initiate a chargeback instead of trying to first obtain a refund from you.

Does that mean your customers are deliberately trying to steal from you? In some cases, yes. There are plenty of cases of intentional friendly fraud, where the customer’s goal is to get something for nothing. However, friendly fraud is the product of a misunderstanding rather than malice most of the time.

Learn more about friendly fraud

What is Accidental Friendly Fraud?

Accidental Friendly Fraud

[noun]/* ak • sə • den • (t)l • fren • (d)lē • frȏd/

Accidental friendly fraud refers to a situation in which a customer abuses the chargeback process, but does so without any malicious intent.

The chargeback process is opaque and confusing. That’s true for your customers, just as it’s true for you.

The average cardholder has no idea how payment processes like chargebacks work. If the buyer calls the bank to inquire about a purchase, the only insight they might have is whether their money reappears in their bank account or not. In some cases, buyers request chargebacks on valid transactions without even realizing what they’re doing.

Buyers who commit accidental friendly fraud often don’t know they’ve done anything wrong. They file chargebacks without realizing the consequences that you’ll suffer.

Distinguishing Deliberate & Accidental Friendly Fraud

Drawing a line between intentional and unintentional friendly fraud can be difficult in many cases. It’s hard to know the cardholder’s true intentions. But, let’s give an example.

In the age of eCommerce, consumers have learned how to game the chargeback system to obtain an unwarranted refund. For example, imagine a customer who wants to return a legitimately purchased item but has waited too long. Knowing the return policy time limit has lapsed, the cardholder bypasses the merchant and calls the bank.

Of course, procrastination isn’t a valid reason for a chargeback, so the customer may claim they never received an item or that a return was never processed. If the deceitful attempt is successful, you end up paying the price.

Learn about valid & invalid reasons for chargebacks

Another form of deliberate chargeback abuse is “cyber shoplifting.” This happens when a cardholder understands how the chargeback process works and deliberately requests invalid chargebacks to try and steal from you.

Learn more about cyber shoplifting

How Does Accidental Friendly Fraud Happen?

When a cardholder has an issue with a purchase, they should always try to resolve it with the merchant directly.

The chargeback process is meant to be a last resort. The cardholder should contact the bank only if they cannot resolve the problem any other way. Failing to abide by this standard chargeback procedure is considered friendly fraud.

Accidental or intentional, the burden of friendly fraud lands squarely on merchants.

The good news: help is here.


The problem is that many cardholders are unaware of this. They suspect fraud and immediately ask the bank to fix it. Their primary concern is getting their money back, regardless of whether it’s the right thing to do.

So, let’s look at some scenarios that could lead to an accidental friendly fraud chargeback:

Unclear Billing Descriptors

Billing descriptors are the line items on a cardholder’s monthly statement. They indicate where each particular transaction was made. Using vague billing descriptors or corporate names can obscure who you are. And, if the customer doesn’t recognize you by name, they may dispute the charge.

Learn more about billing descriptors

Purchases by Family Members

It’s not uncommon for younger consumers to make in-app purchases without a parent’s knowledge or approval. The parent/cardholder doesn’t recognize the charge on their statement and disputes the (technically legitimate) transaction. Such incidents are referred to as “family fraud.”

Learn more about family fraud

Canceled Recurring Transactions

If you process a charge on a subscription account that should’ve been canceled, you could get hit with a recurring billing chargeback. The cardholder might have forgotten the recurring transaction or sent a late cancellation request to interrupt the automatic billing. Whatever the reason, if the charge isn’t expected, it can easily lead to a dispute.

Learn more about recurring billing chargebacks

Delayed/Double Refunds

Customer refunds can take time, but cardholders aren’t always patient. If a refund isn’t processed as quickly as the customer expects, they may call their bank and accuse you of merchant fraud. Even worse, a buyer may dispute a charge after initiating the refund process, leading to a “double refund.”

Learn more about double refunds

Confusing Return Policies

No merchant likes refunds. Trying to discourage returns by enforcing a strict or confusing refund policy will backfire by incentivizing more chargebacks. If the process seems like a hassle, the cardholder will call the bank instead.

Learn how return policies impact chargebacks

Confusing Chargebacks & Refunds

Chargebacks and refunds are separate actions, but few cardholders know the difference. To buyers, chargebacks and refunds are just two different methods of getting the same result.

Learn more about chargebacks versus refunds

Is the Cardholder Always Responsible for Friendly Fraud?

None of the customers in the above scenarios were trying to hurt your business. As far as they’re concerned, they were protecting their own interests. The buyer may not even know they’ve requested a chargeback in some cases.

There are situations in which the cardholder may see a suspicious charge and contact the bank for more information. Bank representatives may misinterpret the customer inquiry, assume the call is a complaint, and initiate a dispute.

All the cardholder wanted was some clarification. Nonetheless, you get hit with an accidental friendly fraud chargeback, and end up losing revenue and paying additional fees for no reason.

Common Question

Who is responsible for friendly fraud?

The responsibility for unintentional friendly fraud claims can vary. Cardholders may not be properly monitoring purchases. Merchants may have vague descriptors or slow responses to refund requests. It’s also possible the bank isn’t fully investigating consumer claims. Often, it’s a combination of these and other factors.

How to Prevent Accidental Friendly Fraud

If you look closely at the above examples, you pick up on a recurring theme. All of the situations happened after the transaction had already been approved and processed.

Fraud filters and detection techniques are almost exclusively designed to identify and block situations where a card is being used suspiciously. Friendly fraud is a post-transaction threat, though. There’s no way to know if a given purchase will be disputed later.

The best way to approach accidental friendly fraud prevention is to implement a multi-level fraud management strategy that can help to lower your risk of fraud overall. This would include:

  • Communicating with customers throughout the order process
  • Simplifying and clarifying billing descriptors
  • Notifying subscribers before charging for recurring payments
  • Using tracking/signed delivery confirmation on larger orders
  • Granting refunds and cancellations as soon as requested

Preemptive measures can't stop all friendly fraud. However, it can cut the problem down significantly.

Learn more about friendly fraud prevention

Look to The Experts for Help

Accidental friendly fraud doesn’t happen in a vacuum. Everything from misinformed cardholders to missteps in your own policies and procedures can trigger unintentional chargebacks.

To protect your revenue, you need an end-to-end risk management strategy for both preventing and fighting unwarranted disputes. That’s too big an undertaking for most in-house fraud-fighting teams, though.

If you’re starting to take chargebacks personally, it may be time to consider professional assistance.

Chargebacks911® delivers the most comprehensive, customized solutions available, as well as the only performance-based ROI guarantee in the industry. Contact us today to learn more.

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