Friendly Fraud

Ignoring Friendly Fraud Could Cost Facebook, Users


If recent media allegations that Facebook turned a blind eye to friendly fraud on the social networking site are true, the Internet giant is exposing itself, its customers, and third-party developers to cybercriminals, said Suresh Dakshina, an expert in eCommerce fraud prevention, and president of Chargeback Gurus.

“If the allegations are valid, it's an unprecedented situation." Dakshina said. "Failing to take any type of fraud seriously could ultimately cost Facebook, its users and credit card holders considerably in credit card chargebacks, as well as possible exposure to true fraud.” said Dakshina. “Ignoring friendly fraud is not something I would ever suggest any of our global clients do. It is a recipe for disaster in terms of long-term loss of revenue and loss of trust with their customers.”

But, he says, these simple strategies could help Facebook avoid such issues, and protect their users:

1. For high stakes gamers, require the player to enter the cardholder's cell number and text a summary of transactions to them weekly. This can eliminate chargeback and refund spikes since the card holder will be aware of the situation at the outset.

2. Restrict children to a daily spending limit.

3. Analyze chargeback data for patterns indicting systemic issues. Every chargeback contains data about how the transaction got to that point. We estimate that over 80% of online gaming chargebacks are friendly fraud, and out of those, at least 50% come from adult gamers trying to take advantage of the system by filing a chargeback with their card issuer.

4. Utilize your internal team to dispute friendly fraud chargebacks or work with a third-party company who can provide better insights about your chargebacks and help recover the lost revenue.

5. Blacklist gamers who have filed a dispute or requested refund to avoid revenue loss from repeat fraudsters.

To help e-commerce retailers fight chargebacks, Chargeback Gurus has released a guide, Why Chargebacks are No Longer a Cost of Doing Business, that provides a roadmap for business on how to avoid chargebacks effectively and significantly improve their bottom line.