4 Ways to Fight Friendly Fraud

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For the most part, fraudulent activity is easy enough to spot. However, one outlier fools even the most advanced fraud-protected merchants: friendly fraud.


Running an online business means constantly monitoring and defending your website from cybercrimes and hacker scams. For the most part, fraudulent activity is easy enough to spot. However, there is one outlier that fools even the most advanced fraud-protected merchants—friendly fraud.

Friendly fraud is becoming a huge problem for many merchants. It’s increased by 41% since 2011, and recent studies show that 86% of chargebacks are deliberate, often with the intent to commit friendly fraud. How can you stop it? There’s no direct way to end friendly fraud, but merchants can be aware of the risks and practice preventative measures to ensure it doesn’t leave a lasting impact on their business. Here in this article, we’ve compiled four simple measures that will help you fight friendly fraud and keep your online merchant account secure.

Step 1: Practice Basic Chargeback Prevention

Those seeking to commit friendly fraud have taken on the chargeback process as their weapon of choice. It works like this: an experienced fraudster seeks out merchants who might be ill-equipped to win a chargeback claim. They purchase items then file a chargeback with their issuer, perhaps claiming the product was damaged or didn’t arrive at all. Underprepared merchants will lose the chargeback case and incur fees, while the fraudster enjoys free goods and their money back.

You can stop this type of friendly fraud by simply preventing chargebacks altogether. With some simple preventative measures in place, fraudsters who target your website will realize that they probably won’t be able to win, and will move on.

Step 2: Require Signature Upon Delivery

In the same stream of the first step, requiring customers to sign for their purchases virtually eliminates the risk of chargeback fraud or friendly fraud. Though it may cost money to implement, it could be worth it in the long run when preventing friendly fraud. If a chargeback is filed against you, the signature receipt could be proof in your favor should you choose to reverse the chargeback.

Step 3: Customer Service

Always make sure your customers are aware of how to contact your customer service representatives. If there’s a billing issue, it is preferable to process a refund rather than file a chargeback. Make sure your return and refund policies are clearly listed on your website, and include them in your confirmation emails after each purchase.

Step 4: Work With Your Credit Card Processor

Sometimes the most valuable tool in fighting friendly fraud is some expert advice. Good credit card processors will address their clients’ chargeback concerns personally. They’ll offer tips, online guides, and person-to-person customer support.

At Instabill, we treat chargebacks and friendly fraud very seriously. Preventing fraud and excessive chargebacks is key to preserving any internet merchant account. Our complete online guide—Chargebacks 101 for Merchants—will help any merchant understand the chargeback process, how to prevent chargebacks, and will provide information on credit card fraud and friendly fraud.

Jul 23, 2015 Category: General Posted by: Marketing
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In Chargebacks 101 for Merchants, Instabill teaches business owners about the chargeback process and chargeback reversal process. Instabill also offers advice on how to prevent chargebacks as well as credit card fraud.

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In Chargebacks 101 for Consumers, Instabill clearly identifies the similarities and differences between refunds and credit card chargebacks. Consumers can learn what situations are best for each type of transaction.

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Instabill is an Internet payment service provider with more than 12 years of credit card processing experience. Learn more about Instabill as well as why the company created the website Instabill.org.

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