Friendly Fraud

What is Friendly Fraud?

Friendly fraud occurs when a legitimate customer makes a purchase and then disputes the charge with their bank, claiming they did not authorize the transaction or receive the goods. Unlike criminal fraud, the person initiating the dispute is the actual cardholder who received the product.

Why It Matters

• It is difficult for merchants to detect because the transaction initially appears completely legitimate.

• Merchants lose the cost of the goods, the shipping fees, and the original sale amount, plus they must pay chargeback fees.

• It forces businesses to maintain extensive documentation and evidence to prove that the customer actually received the order.