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Education

This is the case for blockchain. Be- friendly fraud arises from a legitimate transaction – there's no way to predict
cause there are few case studies and when it will occur. However, safeguards can mitigate its impact. The first and
little data about the technology, there most important line of defense is your customer service. Here are several other
is no way to predict how effective it actions merchants can take:
will be against true fraud, but it looks • Have a clear, comprehensive refund policy that makes it easy for custom-
like it holds good possibilities. ers to return unsatisfactory products and request a refund.

Unfortunately, with friendly fraud, • Use a fast fulfillment system.
which is the most pernicious and • Make sure you have easy to reach, attentive customer service staff. Track
costly form of chargebacks for mer- return shipments so that refunds can be issued promptly
chants, blockchain is not yet a solu-
tion. Friendly fraud is out of reach • Use clear transaction descriptors that reference your store name so cus-
for blockchain because much friend- tomers don't get confused when they review their credit card statements.
ly fraud is based on claims that the • Set realistic expectations for your products, and avoid misleading mar-
product purchased didn't arrive, keting and promotions.
that the order should have been can-
celed or that a family member made These recommendations can help merchants protect themselves from true and
an unauthorized purchase with the friendly fraud, but depending on blockchain at this time as a panacea is prema-
card. Those are common reasons for ture. Blockchain is not ready to take on all of the challenges as a payment tech-
friendly fraud chargebacks, but there nology, as we are still figuring out where in the payment ecosystem it belongs. I
is no way to use a payment system to do look forward to new blockchain developments and believe it will play a role
prevent them. in securing e-commerce technology in the future.
Suresh Dakshina is the president of Chargeback Gurus. A pioneer in data analytics and industry-
Friendly fraud is going to prevail specific risk management, he is a certified ecommerce fraud prevention specialist and Certified
against blockchain because it is per- Payments Professional. He understands first-hand the challenges that business owners face, espe-
petrated by people making false
claims that are nearly impossible to cially when it comes to chargebacks and fraud. Contact him at suresh@chargebackgurus.com.
verify using any kind of payment
system. No existing technology can
predict the human emotions that of-
ten drive friendly fraud.
Prevention measures for true and
friendly fraud
To prevent true fraud, merchants
have a number of options that will
help fight criminal activity, includ-
ing:
• Incorporate fraud prevention
tools designed to identify sto-
len or compromised credit
cards.
• Activate AVS or CVV to screen
out stolen cards.
• Manually investigate address
mismatches and overnight
shipment requests (many
fraudsters use overnight ship-
ping to rush orders before the
merchant can identify and act
upon signs of fraud).
• Verify addresses by calling
or emailing customers when
needed.

Friendly fraud is difficult to pre-
vent. By definition, every instance of

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