As an online business processing customer credit card payments, you’re likely familiar with the concept of “friendly fraud,” also known as first-party fraud. Payment security is paramount, and Paymennt is dedicated to partnering with clients to safeguard both their customers and their business. A crucial aspect of this protection is effectively addressing friendly fraud.

What is Friendly Fraud?

“Friendly fraud” refers to situations where a customer disputes a legitimate charge on their credit card after making a purchase. While genuine disputes and chargebacks occur, friendly fraud involves a false reason for the dispute. This might include claiming they didn’t receive an item or are dissatisfied with a satisfactory product.

Key Distinction: Friendly Fraud vs. Traditional Fraud

Friendly fraud differs from traditional credit card fraud in two ways:

• No Third-Party Involvement: Friendly fraud doesn’t involve a stolen card or unauthorized access.
• Potential Lack of Malicious Intent: The customer may not be acting maliciously, but due to factors like confusion or buyer’s remorse.

Read More about The Three Primary Sources  of Fraud

The Rise of Friendly Fraud in E-commerce

The rise of online commerce and card-not-present transactions has led to an increase in friendly fraud. This trend highlights the importance of addressing this issue.

The Causes :

• Confusion: Customers may dispute charges due to uncertainty about order status or refund processes. For example, a delayed delivery might lead them to claim they never received the item.
• Family Account Sharing: Shared family accounts can lead to disputes if purchases are made without the account holder’s knowledge or approval.
• Buyer’s Remorse: Customers might change their minds about a purchase and seek a refund through their card issuer.

The Impact:

It’s important to recognize that friendly fraud can happen to any business and can cause significant financial losses. Implementing robust fraud prevention measures is crucial to protect your online store.

Effective Strategies to Prevent Friendly Fraud:

• Clear Communication Channels: Establish clear and easily accessible communication channels for customer inquiries.
• Prominent Terms and Conditions: Display your terms and conditions prominently during the purchase process.
• Order Confirmation Emails: Send timely email confirmations with order details, dispatch notifications, and parcel tracking information.
• Delivery Confirmation: Send delivery confirmations as soon as possible.
• Proof of Purchase: Provide customers with receipts and proof of purchase at the time of order. Paymennt.com always sends proof of purchase with merchant contact details. This acts as a record for customers. It potentially prevents disputes if merchant confirmations are delayed.
• Efficient Returns Process: Offer a smooth and prompt returns process to address customer concerns and reduce disputes.

Read More about Prevention & Mitigation of Chargeback

How Paymennt Can Help Mitigate Friendly Fraud

Paymennt is a PCI-compliant payment processor with a dedicated compliance department to assist merchants in contesting fraudulent chargebacks. Additionally, all transactions on Paymennt.com are 3D Secure, adding extra protection against unauthorized card transactions.

Partner with Paymennt for Secure Online Transactions

Contact Paymennt.com today to learn more about our comprehensive fraud prevention solutions and open an account. Together, we can safeguard your business from fraud and ensure a secure and successful online selling experience.