Chargeback Fraud (Friendly Fraud)

Chargeback fraud, often referred to as friendly fraud, occurs when a customer dishonestly disputes a charge on their credit card to a merchant, claiming it was unauthorized or that the goods and services were not received. Unlike traditional fraud, which involves stolen payment details used without the cardholder's knowledge, chargeback fraud is committed by the actual cardholder who may have received the goods or services but claims otherwise. This type of fraud can stem from genuine confusion, forgetfulness, or more commonly, a deliberate intent to deceive for financial gain.

Chargeback fraud presents significant challenges for merchants, impacting their financial stability and business operations. By understanding the dynamics of friendly fraud and employing robust preventive and responsive strategies, merchants can protect their interests. Effective handling of chargeback disputes not only involves disputing illegitimate claims but also enhancing customer service and transaction transparency to prevent disputes from arising in the first place.