Wikipedia defines friendly fraud is a term used to describe a consumer who makes an Internet purchase with his/her own credit card and then issues a chargeback through his/her card provider after receiving the goods or services. And there is nothing friendly about it. The card is legitimate but the consumer is a thief.
According to some of the business blogs I’ve been reading lately, friendly fraud is on the increase by as much as 50% at online jeweler Ice.com Inc. and travel site Expedia. And until the economy gets better I don’t think that trend will reverse.
Friendly fraud can’t be prevented but there are ways to minimize it and there are ways to try recovering losses – or at least make the perpetrator sweat a bit. Most Merchant911.org members know what I’m talking about if they follow the mailing list. Hint: it’s a crime. Those who purchased my course at preventchargebacks.com have a good idea of how to minimize it too.
The bottom line is that, if you do business on line, you should be aware that “friendly fraud” is on the rise and getting a lot less friendly.
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