Guarding against Online Customers Who become “Friendly Fraudsters”

In our last post, we talked about chargebacks and why it’s important to have security in place to ensure your business doesn’t become the victim of fraudulent activity. Kount is a leading fraud and risk management solution that we have integrated into our platform to ensure merchants are armed with the best tools and best-in-class technology to combat increasingly sophisticated thieves.

However, if identity theft was the only issue for merchants dealing with chargebacks, that would be one thing. Unfortunately, it isn’t, which means merchants must consider what kind of protections and strategies they can take to ensure online fraud prevention. Recently, a chargeback recovery specialist was interviewed for an article in where she explained how merchants could be very much at risk.

Why “Friendly Fraudsters” Must Be Taken Seriously



When a credit card or identity is stolen, and a thief attempts to make a fraudulent transaction, there are often clues that can help a security solution, like Kount, alert the merchant that something isn’t right. For example, an IP address in a different part of the country could raise a red flag. Also, multiple purchases on the same website that a customer has never previously visited will certainly trigger a warning. In these cases, the transactions could be canceled before it goes through, so a chargeback is never initiated.

However, what happens if everything about the transaction looks on the up-and-up? The chargeback recovery specialist said there could be two different possibilities here that a merchant must consider when deciding on whether to fight against the chargeback.

On one hand, it could be as simple as unauthorized use of the card. Let’s say a child accidentally purchases something on a parent’s tablet or phone. The parent later sees a charge on their credit card and doesn’t realize it was their inquisitive child who made the transaction. They then report the charge as fraudulent. This scenario would likely not be worth it for the merchant to pursue a chargeback fight.

However, “friendly fraudsters” are a whole other matter. These thieves are just as bad as people who steal other people’s credit cards and attempt to use them. Understanding that the current system protects the customer far more than the merchant, “friendly fraudsters” exploit that very system for their own gain. They will make a purchase on a website and then report later that the transaction was fraudulent.

While this type of fraud can be difficult to prove, it can be worth it to deter the fraudster from engaging in future acts. The most important thing is to have the tools in place to collect and review as much data as possible to build the case. Oftentimes, a “friendly fraudster” will self-identify themself with a poorly thought out social media post, which will make arguing against the chargeback easy. In other cases, data points from the transaction will detail how the fraud took place. Whatever the means, “friendly fraud” is something every merchant should pay attention to when developing a chargeback strategy.