Friendly Fraud Customer Dispute

Frustrated customer with credit card on phone_CardinalCommerceUnfortunately, when merchants start their online businesses, they are also tasked with detecting and preventing fraud. When credit card fraud takes place, the merchant is always accountable, and the customer is always off the hook. However, there are measures a merchant can take to protect and fight back against fraud. Today, we are looking specifically at friendly fraud customer disputes, which occur when a customer purchases something online, and upon receiving it, requests a refund by the bank that issued their card, saying the product was never delivered, or that they never ordered it in the first place. According to a 2014 True Cost of Fraud study conducted by LexisNexis, friendly fraud accounts for 18 percent of all merchants' fraud cases. When a customer disputes a transaction without contacting the merchant directly, that is called a friendly fraud customer dispute. 

So, what is being done to combat this type of fraud? It seems relatively obvious that a customer should have to first speak to the merchant who oversaw the transaction before involving the bank. Some credit card companies have written in their terms and conditions that before a customer requests a chargeback from their bank, they must first attempt to settle the dispute with the merchant. However, it’s still very common for customers to bypass this step.


Currently, the best way for merchants to avoid friendly fraud transaction disputes is by making it very easy for customers to get in touch with them. The more likely a customer is to reach out to the merchant before their credit card company, the less likely it is that a chargeback will be issued. If you’re a merchant, make sure you advertise your business’ contact details so that customers know they can reach out if there is a problem. Also, be sure to provide 24-hour support so that you can be accessible when an issue comes up.

Another way to eliminate friendly fraud is by using a Consumer Authentication solution like Cardinal Consumer Authentication. When an online transaction is authenticated with Cardinal, the merchant enjoys liability shift on the transaction, meaning that the issuing bank validates that the buyer is who they say they are, and takes over the liability if the transaction is fraudulent.

Back to Friendly Fraud

Are you experiencing chargebacks in your online store? Are your consumers abandoning their carts before buying? Learn how Cardinal Consumer Authentication can eliminate fraud and false positives, and provide the benefits of 3-D Secure with friction-free checkout for your buyers. One Connection to Cardinal drives digital commerce. Download the brochure now.