Friendly fraud – this is the way to prevent it

As of February 2020, there is an end 2.8 billion credit cards In this world. This has resulted in increasing user interest in virtual banking and encouraging customers to make online purchases provided by banks. Despite all the efforts of financial institutions to improve the security of all participants in an online transaction, the risk of fraudulent transactions is still high.

An example of unfair profit is a friendly fraud.

Friendly fraud

Imagine a situation where a customer buys a product or service and pays online via credit card.

A typical user, after paying, receives the products and leaves a review on the site. Fraudsters, after sending merchant goods, declare that they have not paid.

At the same time, they either demand a refund from the business owner or write a petition to the bank claiming that their data has been stolen.

The refund procedure can take months and in most cases the decision is not made by the merchant.

Thus, the fraudster accepts free goods and the trader – a blow to his reputation.

How to protect yourself from friendly fraud?

First, use the Verified by Visa and MasterCard securecode programs. Additional security measures for them Online payment processing. Merchant friendly fraud will be able to significantly reduce the number of chargebacks and losses.

We recommend that you process all transactions actively 3D-protected technology. It pays to enter a one-time secret code when making a payment, which comes to the cardholder’s phone. In this case, in the case of fraudulent transactions, the entire liability rests with the issuing bank.

When sending products to customers, use the Address Verification System (AVS), which is another anti-fraud method. It is an electronic system that allows you to verify the address provided by the client when purchasing with a credit card, including the cardholder’s address according to the issuing bank.

In this way, it is possible to check whether the person paying for the purchase is the actual cardholder.

Be sure to keep the documents to make sure the buyer has received the products in full with the declared features.

Also, keep all information about transactions and your customers, including email correspondence, delivery tracking and receipts. Post refund terms on the website and make sure your customers are familiar with them.

Take the opportunity to create a “blacklist” that will block payments through stolen card numbers and will include a list of unscrupulous customers who have previously made fraudulent transactions with payments on your website.

Bottom line

In this article, we have analyzed the methods of dealing with friendly fraud. This is one of the most common methods used by fraudsters. According to ForecastBy 2023, the amount of damage from fraud will be $ 130 billion. The methods listed above will certainly help to avoid many problems in processing.

Finally, we would like to note that the best anti-fraud mechanism is still a reliable payment processor that can efficiently apply all security tools and minimize losses.