Friendly Fraud

Have you ever heard of the term "friendly fraud"? While the name may sound harmless, the reality is quite the opposite. Let's delve into what friendly fraud is and the harm it can cause to businesses and consumers alike.

What is Friendly Fraud?

Friendly fraud, also known as chargeback fraud, occurs when a consumer makes a purchase online and then disputes the charge with their credit card company, claiming that the transaction was unauthorized, fraudulent or they did not receive the goods. In reality, the consumer did make the purchase and happily enjoying their nice, new items, but is trying to get their money back through deceptive means.

How Does Friendly Fraud Harm Businesses?

Businesses are left footing the bill for friendly fraud, as they are required to refund the consumer and incur additional chargeback fees. This can result in financial losses for the company, especially for small businesses like mine that operate on very tight margins. It's a doubler whammy, not only do I lose the value of the goods and the original card processing fees but I get hit with a high chargeback fee on top.

What are the Consequences for Consumers?

While consumers may think they are getting a free product or service through friendly fraud, they are actually contributing to higher prices for everyone. When businesses experience losses due to chargeback fraud, they may be forced to increase prices to offset the financial impact, ultimately hurting all consumers. The credit card companies are getting better at spotting the fraudsters and pouring cold water on their attempts to swindle, but that just makes it more difficult for the rest of us to dispute genuinely fraudulent transactions. Not to mention the fact  that it threatens the future of our favourite small businesses.

How Can Consumers Avoid Participating in Friendly Fraud?

Consumers can avoid unintentionally participating in friendly fraud by carefully reviewing their credit card statements and only disputing charges that are truly unauthorized. It's important to remember that businesses rely on honest transactions to stay afloat and provide valuable products and services to consumers.

By understanding the implications of friendly fraud and making informed purchasing decisions, consumers can help support businesses and contribute to a fair and ethical marketplace for all.