How Friendly Fraud Complicates the Chargeback Process

By Eli Waldman

Senior Customer Success Manager


“Go ahead and buy it. If you don’t like it you can always send it back!” This is a familiar and notorious shopping mantra. Consumers are not as shy about returning goods as they once were and are more confident about asking for refunds in the e-commerce era. 

Not only are refund requests 20% higher for purchases online, but chargebacks have increased 25% since the COVID-19 crisis began. Many of these chargebacks are proven or suspected cases of “friendly fraud,” or are initiated as a bad faith tactic to get an item without having to pay for it. The problem affects online merchants that way shoplifting cuts into the bottom line of brick and mortar store owners. 

This is clearly a problem for merchants, but friendly fraud or chargeback fraud also pose major difficulties for consumers, especially if they legitimately file a chargeback claim. Issuing banks are now more selective than ever with chargeback claims and, therefore, are asking for more concrete evidence during merchant disputes. 

With these new challenges, it is important to enlist the aid of a seasoned fund recovery service when seeking a chargeback for a product or a service. MyChargeBack experts guide consumers who are dealing with a credit card chargeback. We consult with clients, merchants and outside experts to create intelligence reports that can assist in fund recovery.

What Is Friendly Fraud? 

Friendly fraud, or chargeback fraud, is what happens when the customer is the perpetrator and the merchant is the victim. It is the digital version of shoplifting and results in customers getting money back for items they intended to keep from the start. 

They will buy a product that they want and when they receive it they claim that they did not or that it was defective or the wrong type, even though it was not. Although they do not send it back, they file a chargeback claim and if they manage to convince the issuing bank that they are telling the truth, they reverse the charges and, in effect, they steal the item. 

As with other aspects of life, a few bad players can ruin things for the vast majority. The massive increase in friendly fraud has caused merchants to cry foul about many chargebacks and issuing banks to adopt best practices for screening out customer complaints. As a result, the chargeback process is under more intense scrutiny as issuing banks and credit card networks want to maintain their working relationship with merchants. 

Steps Issuing Banks and Merchants Are Taking Against Friendly Fraud

As a result, merchants are putting more pressure on issuing banks to do something about friendly fraud. Issuing banks value their relationships with their merchants and do not want to earn their disapproval. Therefore, the issuing banks are adopting best practices for carefully screening chargeback claims. 

Since issuing banks are being asked to look at chargeback complaints more carefully, at the same time that they are seeing an unprecedented number of customer claims. Therefore, they are more likely to reject some claims outright. 

A customer’s claim can get thrown out if it does not fit the right category, is not well written or articulated and is not accompanied by sufficient evidence. For that reason, customers must make a compelling first impression when they file a claim and communicate its importance and legitimacy. 

Is Friendly Fraud Making Chargebacks Harder to Get?

In the environment of increased friendly fraud, the burden of proof is on consumers more than ever before, rather than merchants, to prove that they are owed a chargeback. When issuing banks would once simply reverse charges, they are likely to ask more questions and demand more evidence. 

In addition, merchants once were more prepared to make refunds and not contest chargebacks to keep customers satisfied. They may have been working on the principle of “the customer is always right,” but the rise of chargeback fraud disproves that motto. More merchants are willing to fight against these chargeback claims and to implement strategies to reduce chargebacks. 

Strategies for a Successful Chargeback Claim

Friendly fraud has caused problems for everyone –merchants, issuing banks and consumers alike. It is entirely understandable that issuing banks are clamping down on chargeback fraud and merchants are fighting back. 

However, this means that if you have a legitimate chargeback claim, you will have to have sound and proven strategies to help you get your money back. The following steps can make a difference in the chargeback process and help you create a successful chargeback claim.

  1. You must try to get a refund from the merchant first.
  2. Make sure that the chargeback reason code is correct.
  3. Make sure you have sufficient documentation.
  4. Work with the right fund recovery service.

When you file a chargeback claim, the issuing bank will ask you if you have brought your complaint to the attention of the merchant and have tried to ask for a refund first. Issuing banks are likely to reject a claim if this step has not been taken. 

Also, make sure you choose the right claim category. It is worth noting that issuing banks have a narrow definition of fraud. If you are claiming fraud in a chargeback claim, that only applies in cases of unauthorized charges. This means that even if you suspect the merchant is fraudulent, you can’t claim fraud if you have authorized the transaction. This would fall under the “merchant dispute” category.

Make sure you have documents ready to go, such as the record of the transaction, communication with the merchant, terms and conditions, and product descriptions. If the transaction involves goods, take photos to show it is defective. 

To increase your chances of a successful chargeback and fund recovery, enlist the aid of a top fund recovery agency. MyChargeBack experts have combined decades of experience working on behalf of clients seeking chargebacks and bank wire recalls, and now crypto recovery as well. 

The MyChargeBack Group has built relationships with more than 800 banks around the world. We understand the concerns of bankers and present our clients’ cases in a language they understand. We have a long track record of success and work for our clients even in the most complex chargeback cases. Talk to MyChargeBack professionals today and take the first step toward chargeback success.