We’re now past the two-year anniversary of EMV, and there is one clear truth: EMV has significantly cut into card-present fraud.

But that doesn’t mean that all fraud is gone yet. And recent trends indicate that one type in particular may be on the rise: friendly fraud.

The World of Chargebacks
Chargebacks occur when customers dispute a charge and ask their credit card company for a refund. If the credit card company accepts their claim, the liability for that transaction then must fall elsewhere—and it often falls on the merchant.

Chargebacks are in many instances legitimate and necessary. But the major trend we’re seeing is the growth of “friendly fraud” chargebacks.

What Is Friendly Fraud?
Friendly fraud is when a real charge occurs where the true cardholder did indeed receive the goods that they were billed for—but they lie in order to dispute the charge and be refunded. In many spaces, especially the restaurant industry, businesses are not prepared to fight these because of the amount of record keeping that is necessary.

It can happen to any store in these industries. Whether it’s a fast food eatery or a high-end restaurant, there are plenty of cases where someone walks in, eats a meal, then walks right out and fraudulently disputes the charge. The same goes for retailers—for example, a person can walk in, buy a piece of clothing, walk out, put it on, and call up their credit card company claiming they just saw the charge on their credit card bill and never purchased the item.

The Growth of Friendly Fraud
And recently, these friendly fraud charges have been occurring more and more often. That’s because while it’s easier than ever for customers to dispute a charge, it remains costly for merchants to contest the chargeback or prove the transaction’s legitimacy.

Many merchants find the burden of proof too cumbersome, and often don’t fight back against chargebacks. Crucial parts of preventing chargebacks include always getting and retaining signatures, having and displaying clear return policies, using clear business names on customers’ credit card statements, and always providing accurate information about your items and services—but even all of these can’t prevent chargebacks.

During the EMV changeover, in particular, confusion about liability became chaotic, and opportunistic fraudsters stumbled upon the viability of friendly fraud at that time. They’ve since continued pushing this method.

What To Do
As fraud evolves, you need to, as well. There are three crucial steps that you should take to begin fighting back against friendly fraud:

1. Make Sure You’re Using EMV. EMV has transformed fraud, but those who don’t use EMV have shouldered a huge additional liability burden—one which many didn’t realize was coming. Every store should accept EMV.

2. Use the best available online verification available. Many merchants think that simply using an address verification (AVS) or CVV will prevent e-comm fraud. But criminals have evolved, and you need to be sure you have more extensive measures in place.

3. Make sure you’re keeping the best records possible. Often, this is facilitated and simplified by technology like digital signature capture.

​​How To Fight The Rise Of Friendly Fraud