How does friendly fraud happen?
The cardholder sees a charge they do not recognise, or regret, and calls their bank instead of the merchant. Some genuinely forgot the purchase or the merchant’s name on the statement, some did not know a family member used the card, and some want the goods and the money. The bank files the dispute, often under a fraud code, and the merchant faces a chargeback for a payment that was legitimate. The Merchant Risk Council calls this first-party misuse one of the top fraud problems for merchants of every size, and says digital goods merchants report up to 80% of their fraud coming from it, which is why it worked with Visa on new evidence rules.
Why does it matter?
Friendly fraud looks like third-party fraud in dispute data, so it inflates fraud ratios, triggers tighter rules and leads to more declines of good customers. As an illustrative example: a digital goods store receives 100 fraud disputes a month. Reviewing them shows that 60 come from customers with earlier undisputed purchases from the same device. Those are candidates for Compelling Evidence, and the store’s fraud rules, tuned on all 100, are probably too strict.
How do merchants respond?
Prevent what can be prevented through descriptors, communication and refunds, and contest the rest with the right evidence: purchase history, device and IP matches, delivery or usage records. Stripe’s documentation notes that a refund cannot be issued outside the dispute process once a dispute is open, so the window for an easy fix closes quickly.
Where does Omno use it?
Disputes are raised and answered through the PSP or acquirer that processed the payment. Omno’s card blocking can stop a card linked to past chargebacks from being used again across the merchant’s brands, customer groups let returning customers follow different rules from first purchases, and the routing-decision log shows which provider processed each payment.