Chargeback Fraud

Chargeback fraud, commonly referred to as friendly fraud, is a deceptive practice employed by consumers to obtain refunds through the chargeback process. Rather than reaching out to the merchant for a direct refund, individuals initiate a dispute with their bank, triggering the chargeback procedure. They make false claims, such as receiving defective or undelivered products, denying authorization for the transaction, or alleging unauthorized charges for recurring subscriptions. However, chargeback fraud occurs when the underlying motive differs from the reasons provided.

In essence, chargeback fraud entails consumers misrepresenting their intentions to exploit the refund mechanism. This fraudulent activity can have severe repercussions for businesses, including financial losses and damage to their reputation.

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