Distinguishing Legitimate Fraud from Friendly Fraud

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Chargebacks911® COO’s New Guest Feature for Multichannel Merchant

While both considered fraud, criminal attacks and friendly fraud are very different threats, demanding different responses. As Chargebacks911 COO Monica Eaton-Cardone explains in her latest feature for Multichannel Merchant, merchants can’t afford not to respond with the appropriate strategy.

In the post, Monica explains that there are legitimate reasons to file chargebacks. When fraudsters use stolen cardholder information, it’s the consumer’s right to demand a chargeback and get the money back. However, chargebacks become a problem when buyers use them outside of their intended purpose.

“Chargebacks are an important tool protecting consumers against fraud. The problem is most chargebacks aren’t the products of criminal fraud,” Monica explains. “In fact, friendly fraud is one of the fastest-growing threats in the online market, occurring when a customer requests a chargeback without proper justification.”

Chargebacks existed before the internet and eCommerce. Unfortunately, chargeback processes have not been responsive to that change. Monica does offer some good news about this problem, though, as the industry is taking strides to bring chargeback procedures in the 21st Century.

The bad news: it’s still not enough. “…most merchants either saw no change in Visa chargebacks five months after the Visa Claims Resolution rollout or reported an increase in Visa chargebacks,” Monica says. “To resolve this growing problem, we’ll need cooperation between institutions and merchants to develop a fairer and more responsive chargeback system.”