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Combating and stopping friendly fraud
Friendly fraud (we personally hate this industry term as there is nothing
'friendly' about it) happens when a customer makes a credit card payment
with their own card and then issues a chargeback
through the card provider after receiving the goods or services with
the aim for getting them for free (in other words, theft!) or because
they fear that their bank statement may be read by someone else and
they get into trouble (as is often the case in the adult industry)
That said... sometimes 'friendly fraud' happens when a customer is
confused and forgets who they have purchased from. Luckily confused
customers are easy to deal with. Please see below:
"Friendly" fraud differs from online
fraud committed by criminals using stolen credit cards. The challenge
with friendly fraud is that there is no way to verify the authenticity
of the actual transaction, which is in fact legitimate.
We find that this happens more with higher risk merchants and also adult
You can’t completely stop “friendly fraud”
but you can implement measures to combat it.
Ways to help stop friendly
fraud (and help confused customers)
Good customer service
The easier it is for customers to contact you and
speak to a real human being, the less likely they are to resort
Confirm what they have purchased
and where it will be delivered
Always provide a order confirmation page showing
the details of the purchase. This should include your company name,
what they purchased, their billing and delivery address and how
to contact you. It is also a good idea to provide the descriptor
that will appear on their card or bank statement - this is especially
so for aggregated payments
where you share a descriptor.
Email them when you have received an order and shipped
it out. Contact them back straight away if they contact you. Email
is the best way to communicate as it provides proof.
Have a good refund policy
A good refund policy is essential. It spells out
exactly how a customer can be refunded and how they need to go about
it. Make it up front and easy to find
Provide terms and conditions
and make them easily accessible
All terms and conditions need to be clearly stated on all pages
of the website. You should include your cancellation and return
policy. Making the customer to “Check the Box” as part
of the agreement is also recommended.
Save as much information
Collect and store as much information on the customer
as well as the order as you can. This will allow you to show that
they did indeed buy from you knowingly.
Use 3D secure and other
This forces the consumer to take extra steps to
validate their identity at the time of the sale which can defer
them from committing “friendly fraud” later on.
Get a signature whenever
Proof of signature is ideal as it stops a customer
from using the excuse that they did not get the item.
Having to deal with people trying to steal from you is all part of running
a business. You may not be able to use guards and alarms like you can
with a high street shop, but you can follow these steps to help prevent
Use your own data against them
Using your own data to prevent chargebacks is a
very effective way to stop a thief from coming back and striking again.
Unfortunately, merchants often don’t Blacklist
the users that did a chargeback allowing new transactions to go through.
Many gateways and processors offer this service for free to their merchants.
They take the data from all of the merchants on their systems and use
it to create a master blacklist. So even if the merchant did a chargeback
with a different merchant you may be protected.