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Education

Friendly fraud and • It's easier to receive money from a card issuer or
• The cardholder simply intended to defraud the
pending mitigation Injury to Insult ...
merchant.

By Ken Musante Some merchants have gone to great lengths to recover
Napa Payments and Consulting their money even though they lost the chargeback dispute.
For example, merchants have found websites, stood up by
riendly fraud is an oxymoron. Like deafening individuals who acquired their product through friendly
silence, it pierces the frontal lobe. There is nei- fraud. The merchant loses the chargebacks and then has to
ther solace nor refuge. It’s sponsored thievery. engage with counsel to shut down the website.
F Merchants have reluctantly harbored its weight
for the benefit of accepting card payments. Mercifully, Mastercard Alert to Control High Risk Merchants
there may be some measured relief in the coming months. (MATCH)

Friendly fraud is a type of cardholder fraud. Visa estimates Further frustrating merchants is that Visa has a Rule
friendly fraud makes up 75 percent of all chargebacks. A whereby merchants exceeding a 0.90 percent chargeback
customer purchases an item online and then disputes the ratio will face a stiff and escalating fee schedule. They may
item, even though it was either a legitimate transaction also be closed by their acquirer and added to MATCH,
or authorized by someone else in their household. It is which is excruciating and renders it difficult to obtain
perpetrated for numerous reasons. The reason may be an merchant processing.
honest mistake such as the cardholder does not recognize
or recall the charge. They may have granted authorization Regarding honest mistakes, there are some actions a
to another person and forgotten they had done so. It may, merchant may take to lessen those dispute types. Proactive
however, be for a more deliberate actions such as: notifications, obvious descriptors and liberal return
policies, are amongst the many actions a merchant may