Friendly Fraud vs. True Fraud: What's The Difference?

In this article, learn about the key differentiators between friendly fraud and true fraud. 

If you operate an eCommerce business, chances are good that you've been the victim of chargeback fraud at some point.

There are two primary types of chargeback fraud that merchants will encounter: friendly fraud, and true fraud. Both can be equally detrimental to your business, but it's important to understand the difference between the two in order to properly identify and prevent them.

What Is Friendly Fraud?

Friendly fraud is something that millions of businesses deal with every day. It's when a legitimate customer makes a purchase with their debit or credit card and then disputes that purchase without a legitimate reason. 

There are three primary causes for friendly fraud:

1. Customer confusion. A customer forgets they made a purchase or doesn't recognize the company name on their bank statement
2. Poor customer experience. A customer may feel like they didn't get what they paid for or the product was a scam. As a result, they may request a chargeback without contacting the merchant.
3. Family fraud. This is when a child or other family member purchases without the actual owner of the credit card knowing. The transaction is discovered on their bank statement and they request a refund for the mistaken purchase.

Preventing Chargeback Fraud

The first step businesses can take in preventing chargeback fraud is to investing in a fraud solution that offers chargeback reimbursement protection. Vesta Payment Guarantee offers a zero-fraud-liability guarantee that completely protects a merchant's revenue from all fraud chargeback liability.

If Vesta approves a transaction, and the cardholder files a fraudulent chargeback claim later, we will cover the loss and any associated fees. With chargeback reimbursement protection, you can completely eliminate the worry of chargebacks.

It's Time to Eliminate Chargebacks... For Good

Vesta's end-to-end transaction guarantee platform can help your business make chargebacks a thing of the past. Our fraud decisioning models are trained on over 15+ years of purchase data, giving your business the most accurate method for approving or declining transactions. We believe that over time our technology will help drive the cost of fraud to zero on a global scale.

If you'd like more information about our platform, contact us today. We'd be happy to put our team to work for you and your business.