5 Ways to Combat ‘Friendly Fraud’
Identity theft and consumer fraud are synonymous with internet scams. From complaint boards to value-added upsells solicited by credit card companies, when it comes to fraudulent online activity, the most common offender is seen as a vicious criminal.
However, a different type of fraud is taking the lion’s share of this nomenclature by storm, boasting an explosive growth rate when it comes to online transactions. The criminal behind the scenes is one who is very rarely recognized. “Friendly Fraud,” a term coined to define the act of a consumer making an online purchase and then contacting their bank stating that the transaction wasn’t their doing, resulting in a chargeback, has become the No. 1 enemy to online merchants today. Friendly fraud is difficult to target or treat because the criminal is a consumer who is normally the least suspected, protected behind a guise of rationale, subjective interpretation or even naive ignorance of the fact that there are gross consequences for their actions.
Stable merchant processing is a vital ingredient to e-commerce success, and chargebacks can create serious liabilities where this is concerned. In today’s marketplace, merchants must consider proactive efforts that help fight friendly fraud and reduce their likelihood to become a target. Consider implementing these five tips:
1. Offer 24/7 (online) support options. Merchants who sell via an e-commerce website but don’t offer online support have a higher rate of friendly fraud than those who do. We live in an age of instant gratification. A consumer is more likely to contact their bank if the merchant is unavailable to assist with a refund request or cancellation.
2. Obtain proof of delivery on any product shipped. Not obtaining a delivery confirmation receipt leaves merchants open for the claim that a product wasn’t received. At the end of the day, it’s the consumer’s word against yours — and typically banks will rule in favor of the consumer, regardless if they received the product or not.