CNP Expo Session Room: What’s So Friendly about Friendly Fraud The term “friendly fraud” was coined to describe situations when a chargeback is issued for a transaction in which the cardholder participated. Expert panelists at a Tueday CNP Expo session on the subject discussed successful strategies to fight friendly fraud chargebacks and retain the disputed funds. Because the cardholder information used was valid, it is difficult to predict which transactions will result in a friendly fraud chargeback. The key, said Julie Ferguson, senior vice president of Industry Solutions for Ethoca, is “to know how to fight the chargeback when [friendly fraud] does happen”.

One method that enables retention of the charged back funds and that can detour consumers from committing friendly fraud with a company again is to contact the cardholder after the transaction has been investigated. It’s an opportunity to determine what really happened and to advise them in a friendly way that you are aware of what they are doing, said Michael Mallon of Accertify.

“When you start to see a third, fourth or fifth chargeback claiming a customer didn’t receive an item, you can make a business decision to contact the customer,” says Mallon. “We have actually seen several friendly fraud customers become good customers with good customer service and the notification that their behavior has been noticed.”

Panelists also discussed various strategies to respond to chargebacks using compelling evidence, which is additional information CNP merchants have access to that card brands allow to verify that the cardholder participated in the transaction. Device ID confirmation, an e-mail address matching a Facebook account, customer history notes and delivery receipt confirmation are all examples of acceptable chargeback dispute information that could lead to a reversal. With good customer management once friendly fraud is detected, merchants can retain many of these disputed orders, and prevent future claims of friendly fraud, once customers know they can’t get away with this practice at their company.