First-party fraud, or “friendly fraud”, is now 50% more common than third-party fraud, according to a report from Fraud.net.
This type of fraud is where apparent customers make a digital e-commerce purchase, but then cancel it. The reasons for cancelling could be due to finding a better deal elsewhere, not needing the service anymore, or simply not wanting to pay for the items or service they received.
Fraud.net released its new Benchmarking Report for Friendly Fraud report, which analysed a random selection of 100,000 charebacks over the past three years. Its investigations unearthed that first-party fraud is now 50% more frequent than third-party fraud, an example of which is using a stolen payment card.
The report also claims that friendly fraudsters will hit a company nine times before they are shut down.
Fraud.net co-founder and president Cathy Ross said, “First-party or friendly fraud involves what appears to be good customers making legitimate purchases, who then seek a refund or chargeback after the transaction is successfully completed.
“Because they appear to be real sales at the time of purchase, many businesses can’t prevent or predict this type of fraud and, worse, are reluctant to flag it after the fact, out of fear that they’ll alienate a future customer.”
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