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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 ones.

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 to chargebacks.

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 payment services where by you share a descriptor.

Constantly communicate
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 as possible
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 authentication tools
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 possible
Proof of signature is ideal as it stops a customer from using the excuse that they did not get the item.

Whether you own a high street business or an online one, 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 it.


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.


 


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