Chargebacks & Disputes FAQ

Why does online fraud occur?

Online fraud occurs for a variety of reasons, including true fraud, friendly fraud and ramifications from industry impacts like EMV and data breaches. All e-commerce merchants are at risk to experience online fraud and should have the proper fraud prevention and security measures in place.

In recent years, card-not-present (CNP) fraud has been on the rise. According to Aite Group, CNP fraud is expected to grow rapidly over the next few years with experts predicting that losses will surpass $7.2 billion in the next four years alone. The U.S. is especially at risk after the EMV migration, as illustrated by spiking CNP fraud rates from countries who have already implemented the technology abroad. Although the U.S.only accounts for about 21 percent of global payment volume, it bears the brunt of almost half the losses due to fraud.*

Online fraud occurs mainly in the following forms:

  • True fraud. Criminals use stolen payment information to make fraudulent purchases online, scamming merchants out of merchandise and money
  • Friendly fraud. This occurs when customers make a purchase and then dispute the transaction, claiming that:
    • They didn’t receive the purchase
    • The order they received was not as advertised or was broken or damaged
    • They don’t recognize the transaction and believe it to be fraud



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