Be On Guard

Phony Chargebacks Plague Honest Business Owners

Credit Card ChargebackOver the past few years, the phenomenon of Friendly Fraud has become a top issue for brick-and-mortar and online stores. One survey found that almost a quarter of all fraud losses by big online stores were the result of friendly fraud as opposed to genuine identity theft.

Ecommerce stores have been fighting friendly fraud since the inception of the Internet, but the sheer number of dishonest consumers has grown almost out of control.

Disputes Grow

A veritable arms race has developed between ecommerce retailers and people who believe that they can get things for free, and it has gotten to the point that the dispute process is now much more difficult even for people who have honest complaints. The allegation of identity theft also hurts banks and processors, since they generally issue new credit cards and numbers to the person making the dispute.

Stronger Reporting and Preservation

Friendly fraud is most often fought by creating a digital trail for every part of the transaction. For example, the IP address of the ordering computer or mobile device is preserved, the shipping information, including tracking numbers and shipper notes, are used in fighting chargebacks, and in those cases where a person made an in-store purchase, camera footage is used that compares the transaction to the actual person at the register. New anti-fraud devices like these, which imprint the authorization for the card onto the image of the shopper, have revealed quite frequently that the person alleging fraud is actually the one who made the purcase. In some egregious cases, the store may choose to prosecute and shame the fraudster in order to deter others from making such claims in the future.