What if my Representment is Incorrectly Declined?
And what if a successful RDR or Ethoca submission gets charged back? Read on This blog breaks down the next steps.
Anyone with a credit/debit card probably understands the impact of fraud – whether real or ‘friendly.’
The rise of so-called ‘friendly fraud’ makes this type of fraud seem somehow lesser than actual fraud. But is this actually the case? The answer to this question begins with the definitional difference between the two types of fraud.
A credit card statement appears and there is a charge you did not make – sometimes many. Maybe your credit card information was stolen, either physically or virtually or you’ve experienced identity theft, where a fraudster is opening completely fraudulent accounts in your name. You contact your credit card issuer to contest the charge. When a consumer is a victim of real fraud, their main recourse is a chargeback. This is one of the reasons the chargeback process exists today.
This type of fraud can arise from either the card holder or a family member. With the rise of stored payment credentials within multiple electronic devices, it is easier than ever to make a purchase without notifying the owner of the card or asking for permission to make a purchase. Friendly fraud can also be a form of buyer’s remorse where the customer doesn’t want to admit to making a purchase and simply denies participating in the transaction. Every merchant in the card not present (CNP) space feels the pain of friendly fraud.
According to a report put out by Sift, 2022 saw the chargeback dollar amount rise by 16%. And 1 in 4 consumers who filed a chargeback admit to committing friendly fraud. For several reasons, cases of friendly fraud have seen a precipitous rise in recent years:
So, what can merchants do to combat both true fraud and friendly fraud?
Still, chargebacks will occur, and another good defense is to keep detailed records and always be on the lookout for suspicious behavior. When a transaction can be identified as true fraud, it makes ethical sense to just accept that chargeback. However, when a merchant can identify a dispute as friendly fraud, they must be prepared to fight these chargebacks to recoup their funds.
When you’re ready for what’s next in subscription CNP payments success, there’s Slyce360.
Note from our editor: This post was originally published in January 2022 and updated on June 2023 for comprehensiveness.
And what if a successful RDR or Ethoca submission gets charged back? Read on This blog breaks down the next steps.
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