Chargeback Fraud — also referred to as friendly fraud — happens when a customer intentionally files a false chargeback claim with their card issuer, disputing a legitimate transaction.
In such instances, the customer might assert that they didn’t authorize the transaction, didn’t receive the goods or services as promised, or were dissatisfied with their purchase, despite evidence suggesting otherwise.
Chargeback fraud presents a substantial challenge for merchants as it can result in lost revenue, additional chargeback fees, and potential harm to the merchant’s reputation. To mitigate the risk associated with chargeback fraud, merchants should:
- comprehensive transaction records
- promptly address customer concerns
- adopt robust security measures to confirm the customer’s identity during transactions