Successful merchants know where their money comes from and where it goes. They know the opportunities for the business and they know the risks. But how many merchants recognise that one of the biggest threats to their bottom line comes from an unlikely source?
The actions of the ‘ordinary’ consumer are causing bigger industry losses than identity fraudsters. ‘Friendly fraud’ has been growing 41% in recent years, costing over €10bn in industry losses, compared to around €2bn lost through ID fraud, according to Visa. As ecommerce continues to grow at close to 20% per year in the EU, with total ecommerce revenues predicted to be €185.39bn for 2015, its vital merchants know about the risk, are able to identify it and can move quickly in order to mitigate the risk.
What is friendly fraud?
Friendly fraud is the hidden problem in ecommerce because merchants don’t often realise the extent of it and it is not typically carried out by criminal gangs, but by ordinary consumers. More and more customers are fraudulently claiming chargebacks on credit card transactions and merchants are bearing the brunt of it. The worry for merchants is that they often do not know about the problem until they get hit with a chargeback – 58% of cardholders do not contact the merchant at all but file the dispute directly with the bank.
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