In a recent interview with Furniture Today, Chargebacks911 founder Monica Eaton was asked to share her inside knowledge of post-transactional threats like friendly fraud, and to explain how retailers should prepare and respond.
Furniture Today is the complete information source for the furniture industry, featuring retailer and manufacturing news, plus product trends and market analysis.
As noted in the article, global eCommerce merchants are expected to lose $48 billion in 2023 from fraud. That’s up 16% from last year’s total. Of these, North American merchants will hold a hefty share, expected to account for 42% of the total loss due to fraud in 2023. While stolen data remains the biggest risk for e-commerce companies, another kind of deception is on the rise: Friendly fraud.
“The trouble with friendly fraud is that it constitutes a particularly gray area that banks are hesitant to investigate,” Monica warns. “Banks tend to err on the side of their customers in a dispute, even if their customers fail to understand the rules or just generally disregard them. These situations arise from commonly misconstrued return policies, merchant error, or malicious intent.”
Loopholes in the chargeback system are exacerbating the issue, as Monica further explained. “For example, a consumer might receive a post-purchase phone notification to confirm that a charge was legitimate. However, the transaction is often authorized and settled before the customer receives the notification and decides to provide feedback on the charge. This leads the financial institution to instigate the chargeback, whether the complaint is innocent or malicious. Experts compare this form of digital automation to ‘leading the witness,’ where the chargeback case stems from prompted behavior.”
