Digital wallets, like Apple Pay and Google Pay have become more popular during the pandemic, allowing people to use contactless payment methods, which has been on the rise.
E-commerce merchants have long dreaded chargebacks, especially the ones that result from friendly fraud and refund fraud. A customer lies about never having received their shipment, or they claim it arrived damaged, or it wasn’t the right item, and could they please get a replacement?
Friendly fraud is such a problem that it costs the credit card industry $31 billion per year. Friendly fraud and malicious fraud have increased over the last eight months, and many merchants were not prepared to fight it.
Honestly, credit card statements and bank statements can be some of the biggest sources of chargebacks, and can be a real pain for both merchants and banks. When a consumer doesn’t recognize a charge on their bank statement, they immediately call the bank and dispute the charge.
When dealing with credit card fraud, there are two basic types: Friendly fraud and malicious fraud. And as a retail merchant accepting credit cards and other forms of digital payments, it’s important to understand both so you can combat them both in their own way. Let’s start with malicious fraud.