Disputes

Friendly fraud

Also: First-party fraud

A chargeback filed by a real cardholder for a transaction they actually made, often because they don't recognise the descriptor or want a refund without contacting the merchant.

Friendly fraud, also known as first-party misuse, occurs when a legitimate cardholder disputes a valid transaction through their issuer instead of seeking a refund from the merchant. This often happens because the customer does not recognise the billing descriptor on their statement or forgets a recurring subscription. Unlike criminal fraud, the transaction was authorised by the cardholder, but the dispute leads to a chargeback that triggers merchant fees and affects scheme thresholds. To mitigate these disputes, merchants can use tools like Visa Compelling Evidence 3.0 or Mastercard First-Party Trust, which allow the sharing of historical data to prove a prior relationship. Regulators and card schemes are increasingly focused on this area to reduce the operational burden on acquirers and issuers. Effective prevention often involves sending immediate digital receipts and maintaining clear communication to ensure the cardholder recognises the transaction during their next statement review.