Deliberate chargeback fraud is a form of credit card fraud that happens when a customer uses their own payment card to intentionally game the system. This type of fraud can cost merchants a lot of time, money and lost merchandise or services. Whether the fraud is accidental or intentional, it’s still a serious problem for businesses and the modern payment ecosystem.
Almost every business will experience some level of chargebacks, but not all are created equal. There are legitimate reasons why a customer might dispute a transaction, including misplaced orders, incorrect shipping information and other errors that can lead to a chargeback. But, in many cases a chargeback is not due to these issues and is instead deliberate. The good news is that there are some tools and strategies that can help merchants avoid the high loss rates incurred by friendly fraud.
The Art of Deception: Tackling Deliberate Chargeback Fraud in E-Commerce
In order to understand and prevent friendly fraud, it’s important to distinguish between it and chargeback fraud. The difference is in intent – chargeback fraud involves malicious behavior, while friendly fraud is often an honest mistake or misunderstanding on the part of the cardholder. This is especially true for customers who frequently use their credit cards for online purchases. For example, if someone has a habit of filing a chargeback for all their online purchases, it is worth taking note and looking into their history. Then, a merchant can take steps to address these problems by using tactics like dispute representment, which involves countering a customer’s chargeback request with new evidence.