Friendly fraud doesn’t always look like fraud. Sometimes it sounds like:
"I didn’t recognize the charge."
Or: "I thought I canceled."
Or: "My kid must’ve used my card."
These excuses may seem harmless, but they cost merchants billions. Friendly fraud prevention takes more than hope, and you need tools that actually make it harder for customers to “accidentally” steal from you. Here's how to get ahead of it.
What Is Friendly Fraud?
Friendly fraud is when a customer makes a purchase, receives the product or service, and then disputes the charge through their bank anyway. It can be accidental or intentional. Either way, it leads to chargebacks, revenue loss, and processing headaches.
Why It’s Hard to Catch
Unlike true fraud, there’s no stolen card or hacked account. The transaction is legitimate. That’s what makes friendly fraud so hard to fight. Your evidence often isn’t enough, especially if the bank sides with the cardholder.
Tactic #1: Fix Your Descriptor to Reduce Confusion
A confusing billing descriptor is one of the easiest ways to lose a chargeback. If your business name doesn’t match what appears on a customer’s statement, you’re inviting disputes.
Prevention fix:
Use clear, recognizable descriptors. Include your business name and a keyword that helps the customer recall the purchase. Avoid internal codes, abbreviations, or holding company names.
Example:
Bad: PAYMENT*TECHWEB
Better: TECHWEB.COM SOFTWARE
Some processors also support dynamic descriptors, which means the text changes depending on the item sold. Ask your payment processor if this is available.
Tactic #2: Confirm Orders Instantly (With Details)
Right after purchase, send an email confirmation with all the details. It should include:
- What was purchased
- When and where the charge will appear
- Support contact info
- Cancellation/refund policies
Why it matters:
It creates a digital receipt. If a customer claims they didn’t authorize the charge, this email becomes part of your dispute defense and often jogs their memory before they even call the bank.
SMS confirmations can be even more powerful if your audience is mobile-heavy.
Tactic #3: Delay Refunds (With a Policy in Place)
It sounds counterintuitive, but delaying refunds slightly can reduce chargebacks.
Here’s how it works:
If a customer files a dispute the same day they request a refund, you could get hit twice—once with a refund, and again with a chargeback fee.
The fix:
Add a 3–5 business day refund processing window in your terms. Let customers know this upfront. If they contact support, thank them for their patience and confirm the refund is in progress.
This delay gives you time to catch and cancel incoming disputes before they’re finalized.
Tactic #4: Adjust Your Customer Support Tone
Many friendly fraud disputes start with a bad experience. The customer couldn’t find help, didn’t like your response, or felt ignored, so they called the bank.
Small changes can stop that from happening:
- Respond quickly (especially to refund requests)
- Use clear, polite, but firm language
- Don’t challenge their emotions, focus on resolving the issue instead
- Remind them of what they agreed to (terms, policies, delivery timelines)
Even if you’re declining a refund, a supportive tone can discourage a dispute. Many customers file chargebacks out of frustration, not because they truly believe they were scammed.
Tactic #5: Use Friendly Fraud Codes to Spot Repeat Offenders
Once a chargeback is filed, the reason code tells you what type it was. Some reason codes (like Mastercard 4863 or Visa 13.1) signal friendly fraud with claims like “I didn’t authorize this” or “I don’t recognize this charge.”
Track these codes.
If a customer has a history of friendly fraud codes, flag their account. Consider blacklisting them, requiring extra verification, or restricting refunds. Repeat offenders will cost you more over time.
Tactic #6: Add Pre-Dispute Tools if You Can
If you use tools like Visa Order Insight or Verifi’s RDR (Rapid Dispute Resolution), you can respond to disputes before they become full-blown chargebacks.
These tools send the customer’s issuing bank real-time order data. If the bank sees the evidence (like delivery confirmations or refund timelines), they may drop the case.
Bonus: Some platforms allow auto-refunding to avoid the chargeback altogether. It’s not ideal, but better than taking a hit on your dispute rate.
Conclusion
Friendly fraud prevention isn’t about playing defense after the fact. It’s about setting up systems that reduce confusion, create friction for bad actors, and make your real customers think twice before calling the bank.
You don’t have to stop every dispute. But these tactics can significantly cut them down—and make your wins more likely when they do happen.
FAQ: Friendly Fraud Prevention
What’s the difference between friendly fraud and true fraud?
Friendly fraud happens when a cardholder disputes a legitimate charge, usually because they forgot, didn’t recognize it, or changed their mind. True fraud involves unauthorized transactions, often from stolen cards or identity theft.
How can I tell if a chargeback was friendly fraud?
Look at the reason code and customer history. If the product was delivered and there’s no clear fraud, it’s likely friendly fraud. Codes like Visa 13.1 or Mastercard 4863 are common indicators.
Can I win a friendly fraud dispute?
Yes, but you need strong evidence such as delivery confirmations, customer communication, and proof of agreement to terms. Tools like Visa Order Insight can help by sending this data to banks before they finalize the dispute.
Should I refund a customer after a chargeback?
No. If a chargeback is filed, the funds are already pulled from your account. Refunding after that could mean you lose money twice. Wait for the outcome of the dispute process.
Is it legal to block customers that repeatedly do friendly fraud?
Yes. You can refuse service to anyone engaging in abuse, as long as you’re not violating anti-discrimination laws. Just make sure your terms of service allow for account termination.
Detect and Prevent Friendly Fraud Faster with Chargeblast
Chargeblast gives merchants real-time alerts, evidence automation, and win-rate tracking to help you fight friendly fraud before it gets out of hand. We help you spot repeat offenders, sync refund timelines, and respond to disputes in no time.
Friendly fraud isn’t going away, but with Chargeblast, it doesn’t have to win.
