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.