Oxymoron or not, it’s a real term coined by the credit card industry to describe a consumer that purchases an item online and then falsely claims they:
• Never received the item
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• Had their credit card stolen and were charged for items they didn’t order
According to the Wall Street Journal many companies – including the travel site Expedia – have seen spikes of up to 50 percent in friendly fraud since October 2008. The Journal reports that in Expedia’s case, “friendly fraudsters buy non-refundable plane tickets or trips through the site, but claim they never authorized the purchase, and stick the Seattle company with the cost of the tickets, or in some cases the entire trip, after it’s been taken.”
When these fraudsters are unable to successfully demand reimbursement from the business directly, many then issue chargebacks to their credit card companies. If you’ve ever been subject to a chargeback, you know creditors will investigate the situation, asking for the business owner’s side of the story before deciding whether or not you are at fault.
Companies that have been hit hard by this type of fraud say in some cases it’s as blatant as the consumer sending a box of rocks to the company claiming it’s a return, but other cases aren’t as black-and-white. The challenge becomes figuring out which consumer is “kindly” ripping you off versus the one that has a legitimate gripe.
Defending against friendly fraud is no easy task, but there are some steps your business can take to avoid that double whammy of losing both the merchandise and the revenue to this type of fraud:
• Verify the buyer’s billing address before sending merchandise. Some retailers require the billing and shipping address match before fulfilling an order. However, some businesses have found that simply paying for an Address Verification Service, which confirms the billing address matches the address associated with the credit card, is sufficient.
• Use a shipper that tracks delivery. Some shipping firms provide tracking information and signature confirmation. Such information can help shed light on whether or not the customer really didn’t receive the goods.
• Deactivate or deny access to products. For retailers that do not ship tangible items, but rather items such as downloads or access to sites, a plan for denying access is both prudent and practical.
• Clearly state your return policy on your website. This includes any product guarantees, time restrictions, condition requirements or fees — such as for restocking.
• Be prepared to make your case to the credit card company. Staying organized and presenting a solid case — including records of delivery or reimbursement and your return policy — in the face of a chargeback will assist the credit card company, and increase your chances for a favorable resolution.
• Analyze sales records. This can help you identify consumers who charge back items on a regular basis, enabling you to decide whether or not to stop doing business with them.
ShredFest
The BBB will host its annual ShredFest from 9 a.m. to noon Nov. 7 in the parking lot of its building, 434 S. Williams Blvd. in Williams Centre on the southwest corner of East Broadway and Craycroft Road. This one day eCycle event not only gives residents a secure way to recycle old documents and guard against identity theft, but collects old cell phones, computers, laptops, parts, peripherals, and office equipment. For details on what’s being collected and where it’s going please, visit www.tucson.bbb.org/shredfest.
Contact Kim States, CEO of the Better Business Bureau of Southern Arizona, at kstates@tucson.bbb.org or (520) 888-6161 or 1-800-696-2827 toll-free outside of Tucson. The BBB website is: http://www.tucson.bbb.org. The BBB of Southern Arizona serves Pima, Cochise, Santa Cruz, Graham, and Greenlee counties in Arizona and all of the state of Sonora in Mexico. Offices are at 434 S. Williams Blvd., Suite 102.
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