Friendly fraud & chargeback prevention guide

How can you as a merchant implement a multi-layer strategy against friendly fraud and chargebacks to safeguard your business?

Friendly fraud, also known as chargeback fraud, can be particularly challenging for high-risk e-commerce merchants. Such merchants often face a higher likelihood of chargebacks due to factors such as the nature of their products or services, buyer’s remorse, subscription billing models and a more complex regulatory environment. Sometimes it is also caused by consumers simply not recognizing the transaction in the first place and raising a dispute. Here are some strategies to help battle friendly fraud for high-risk e-commerce merchants:



1. Enhanced Fraud Prevention Tools:

Implement robust fraud prevention solutions and tools that can detect suspicious transactions. This may include address verification, card verification, device fingerprinting, and behavioral analytics.


2. Clear Billing Descriptors:

Ensure that your billing descriptors are clear, recognizable, and accurately reflect your business. Unclear billing descriptors can lead to unintentiona lchargebacks.


3. Transparent Return and Refund Policies:

Clearly communicate your return and refund policies on your website.

Make sure they are easily accessible and easy to understand. This can discourage customers from filing chargebacks when they are dissatisfied.


4. Advanced Authentication Methods:

Implement strong customer authentication (SCA) methods as required by regulations likePSD2 in Europe, and also like other emerging regulations appearing in previously non-regulated regions across the globe. SCA adds an extra layer of security to high-risk transactions.

5. Detailed Order Records:

Keep thorough records of all transactions.

That includes IP addresses, device information, timestamps, and custome rinteractions. These records can be valuable evidence in chargeback disputes.


6. Customer Communication:

Maintain open and responsive communication channels with your customers. Address theirconcerns quickly and professionally to prevent disputes from escalating tochargebacks.


7. Chargeback Alerts and Management:

Invest in chargeback alert services that provide early notifications of potential chargebacks. Develop a robust chargeback management process to respond promptly and provide compelling evidence to contest illegitimate claims. One of the ways to effectively battle chargebacks is RDR by Verifi (a VISA company) and EthocaAlerts (MasterCard)


8. Compliance with Regulations:

Stayinformed about and adhere to relevant regulations and compliance standards,especially if you operate in different regions. Consult with legal experts to ensure compliance.


9. Education and Training:

Train your staff to recognize and handle potential fraud or dispute situations effectively. 

Educate them about the risks associated with friendly fraud and how to mitigate them.


10. Transaction Risk Scoring:

Develop a risk-scoring system to identify high-risk transactions. Adjust your approval and verification processes accordingly.

11. Collaboration with Payment Processors:

Work closely with your payment processor to monitor transactions and address potential issues promptly.


Battling friendly fraud in high-risk e-commerce requires a combination of proactive prevention measures, effective dispute resolution, and a commitment to compliance and customer service. Collaboration with payment processors and chargeback management services are invaluable in managing this challenge!

Friendly fraud & chargeback prevention guide
Marek Madej
eFlow Secure Product Manager


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