One of the biggest challenges facing online (card not present) merchants is “Friendly Fraud”. What do we mean by friendly fraud? The standard definition for friendly fraud is when a customer uses a credit card to make a purchase, and then disputes the charge with their credit card company once the item(s) are received. Consumers use friendly fraud to obtain item(s) for free. Friendly fraud can be broken into two categories; deliberate and accidental. Deliberate friendly fraud would fall under the standard definition of friendly fraud. Where accidental friendly fraud can occur when a customer doesn’t realize what a charge is for.
All types of e-commerce companies have dealt with friendly fraud at one time or another. Within the past few years there has been an increase in deliberate friendly fraud. There are a few factors that have contributed to the rise in deliberate friendly fraud; such as the shape of the economy worldwide, individual financial situations, and consumer’s knowledge of how to take advantage of the banking system. Unfortunately, the economy can impact a person’s financial stability which can cause this type of deliberate fraud. What someone can afford today, they may not be able to afford tomorrow. This can lead them to drastic measures to hold on to any funds they have.
