Friendly fraud

When a customer disputes a charge as unauthorized or undelivered, even though they actually made the purchase and received it.

The customer may have forgotten the purchase, not recognized the name on their statement, or decided to get their money back while keeping the item.

A first-party dispute in which a genuine cardholder files a fraud chargeback despite having authorized and received the transaction, ranging from a genuine mistake, like not recognizing a charge on a statement, to a deliberate scheme.

Friendly fraud covers a wide range of causes:

• Honest mistakes, such as not recognizing a billing descriptor or forgetting a subscription.
• Household confusion, such as a family member's purchase that the cardholder does not know about.
• Buyer's remorse, where a customer disputes instead of returning the item.
• Deliberate abuse, where a customer keeps the goods and claims they were never received. This version is called a liar buyer.

Some card networks use the term first-party misuse for these disputes.

Merchants contest them with evidence:

1. They gather proof of the order, such as delivery confirmation, a signed receipt, and communication with the customer.
2. They add records of earlier undisputed purchases from the same customer or device, where network rules allow.
3. They submit the evidence in response to the chargeback.

Friendly fraud sits next to terms that are easy to mix up:

• Liar buyer is the deliberate version of friendly fraud.
• First-party fraud is the broader category of fraud by a genuine account holder.
• Chargeback is the dispute process that friendly fraud uses.