The terms get thrown around a lot, sometimes even used interchangeably. But friendly fraud and chargeback fraud aren’t the same, and for merchants, knowing the difference matters. A lot.
So what separates these two types of fraud? Is one more damaging than the other? And what do you need to know to protect your business from both?
Let’s get into it.
What Is Friendly Fraud?
Friendly fraud happens when a cardholder makes a legitimate purchase, then later disputes it with their bank, even though the transaction was valid. It’s “friendly” because the customer isn’t always trying to scam you outright. Sometimes they forget the purchase. Sometimes they don’t recognize your billing descriptor. Sometimes a kid used their card without permission.
But here’s the twist: it’s still considered fraud, even if it’s accidental.
The problem is that banks usually side with the cardholder. You get hit with a chargeback and lose the money. Then you lose the product. Then you pay a fee. And it’s not like you can call the customer and work it out. Once the dispute is filed, you’re already in defense mode.
Friendly fraud makes up a large chunk of disputes in the eCommerce world. Some sources estimate that it accounts for more than 60% of chargebacks in certain industries.
What Is Chargeback Fraud?
Chargeback fraud is more intentional. The person disputing the charge never had the right to make the purchase in the first place. Maybe they used a stolen credit card. Maybe they spoofed someone’s account. These cases are often flagged early—either by fraud filters, identity verification tools, or by the cardholder themselves when they report the unauthorized charge.
Unlike friendly fraud, this kind of fraud fits into what people traditionally think of as criminal behavior. It’s external. It’s malicious. And it’s usually backed by stolen data.
Banks are more cautious here. They may investigate more closely. If the cardholder is filing multiple disputes, it could trigger a deeper fraud review. But you still lose money if you can’t prove your case, especially if your fraud tools missed the red flags.
Friendly Fraud vs Chargeback Fraud: A Simple Comparison
Here’s a breakdown of how these two types of fraud differ across the board:
Real-World Examples
Friendly Fraud Example: A customer buys a downloadable video game, plays for hours, then calls the bank and says their kid made the purchase without permission. Since the charge was “unauthorized,” the bank processed a chargeback, even though the game was used.
Chargeback Fraud Example: Someone uses a stolen credit card to buy three smartphones. They get shipped to a drop address. By the time the real cardholder notices and disputes the charges, the fraudster is long gone.
Both hit your bottom line. But with friendly fraud, it often feels personal.
Why Friendly Fraud Is Tougher to Manage
Here’s the frustrating part: you can do everything right—get a signed delivery confirmation, send order tracking, offer great customer support—and still lose the dispute. That’s because friendly fraud relies on cardholder claims, and those claims are hard to disprove without rock-solid evidence.
Even with compelling evidence, banks might reject your response. Some acquirers and issuers don’t treat merchant evidence with the weight it deserves. And if you’re hit multiple times, your chargeback ratio spikes. That can lead to penalties, merchant account holds, or placement in chargeback monitoring programs like Visa’s VFMP or Mastercard’s ECM.
In comparison, chargeback fraud may be easier to prevent up front. You can use fraud scoring, IP velocity checks, or BIN/IP mismatch alerts. With friendly fraud, those tools often don’t help—because the fraud happens after the sale, not during it.
So… Which One’s Worse?
If we’re talking raw intent, chargeback fraud is clearly more malicious. But in terms of damage to your business? Friendly fraud is often worse. It’s harder to detect, harder to fight, and it happens more often.
The real danger with friendly fraud is how invisible it is. You might not even know it’s happening. It can look like an honest mistake. But over time, those “mistakes” pile up, and suddenly your dispute rate is through the roof.
In fact, friendly fraud is one of the main reasons merchants struggle to stay under Visa’s 0.9% chargeback threshold.
Final Thoughts
Both types of fraud hurt, but friendly fraud cuts deeper because it’s harder to stop. You can’t always flag it with a filter. You can’t always explain it to a customer. And you can’t always win when it ends up in the bank’s hands.
Knowing the difference between friendly fraud vs chargeback fraud isn’t just semantics. It shapes how you fight back, how you build your defenses, and how you survive in a world where every dispute can cost you more than just a sale.
Stop Losing to “Accidental” Fraud. Fight Back with Chargeblast.
If you’re tired of losing money to disputes that shouldn’t have happened in the first place, it might be time to rethink your chargeback strategy. Friendly fraud vs chargeback fraud may seem like a subtle distinction, but the impact on your business is anything but subtle.
Chargeblast helps businesses prevent, track, and respond to disputes before they spiral into lost revenue and reputational damage. With advanced alerting, pre-dispute workflows, and dispute intelligence built in, we make it easier to separate real fraud from bogus claims. Want to stop refunding perfectly legitimate sales?
Let us show you how.
