{"id":11091,"date":"2016-06-24T09:09:00","date_gmt":"2016-06-24T14:09:00","guid":{"rendered":"https:\/\/www.hostgator.com\/blog\/?p=11091"},"modified":"2016-06-24T09:10:40","modified_gmt":"2016-06-24T14:10:40","slug":"friendly-fraud-small-business","status":"publish","type":"post","link":"https:\/\/www.hostgator.com\/blog\/friendly-fraud-small-business\/","title":{"rendered":"Why \u00e2\u20ac\u0153Friendly Fraud\u00e2\u20ac\u009d Is the Enemy of Small Business"},"content":{"rendered":"

\"Friendly<\/p>\n

Friendly fraud, generally speaking, occurs when customers order digital or physical goods, falsely claim they never got them, and ask their credit card issuer for a chargeback. Another variety of friendly fraud is purchases made with stolen credit card numbers that look legitimate — until the real cardholder calls in a chargeback request. If you run an online business, friendly fraud is most definitely not<\/i> your friend.<\/span><\/p>\n

This type of fraud hits e-commerce merchants of all kinds, big and small. In fact, it\u2019s on the rise because now that EMV controls have made it harder to commit fraud at the point of sale in the US, thieves are now shifting their sights to online shops that are more vulnerable to credit card fraud and that includes small merchants who may think they\u2019ve escaped fraudsters\u2019 notice.<\/span><\/p>\n

How much does friendly fraud cost?<\/span><\/h2>\n

Friendly fraud cost merchants more than $11 billion<\/span><\/a> in 2012, and the problem has only grown since then. Chargebacks are rising<\/span><\/a> by about 20% per year, and card-not-present merchants those who sell online and over the phone are particularly vulnerable.<\/span><\/p>\n

[bctt tweet=”Friendly fraud cost merchants over\u00a0$11 billion in 2012, and chargebacks are rising 20%\/yr. #ecommerce” username=”hostgator”]<\/p>\n

That\u2019s the industry-level view. For any given merchant, a single chargeback can incur a processing fee<\/span><\/a> of anywhere from $15 to $100 and that\u2019s just the start. Each chargeback also represents a loss of the shipped goods plus the revenue from the transaction. Worse, too many chargebacks (generally more than 1% of all transactions) can cost merchants their business if their banks cut them off.\u00a0<\/span><\/p>\n

What are potential signs of friendly fraud?<\/span><\/h2>\n

Not every transaction that raises a flag is actually fraud, but you or your fraud-management partner should carefully screen transactions that fit these descriptions. <\/span><\/p>\n