Quantifying the challenge of Friendly Fraud

First-party misuse, also referred to as friendly fraud, can be a challenging type of fraud to fight with traditional fraud management tools. Friendly fraud occurs when a customer disputes a legitimate transaction, usually claiming it was unauthorized. Often customers just don’t recognize the charge, even though it’s legitimate. Or sometimes they forget or were unaware that they authorized it. No matter the underlying reason, the result is the same—financial and even reputational damage for merchants.

Tools to boost your defenses
Investing in effective fraud management tools is the first step to fighting friendly fraud and improving your fraud rates. While most merchants believe that in-house dispute prevention is more effective than third-party services, research shows that the opposite is true. In 2025, Merchants only lost 1% of revenue when they used third-party services, versus a loss of 2.9% of revenue when they used in-house prevention¹.

For merchants who don’t have an in-house team or whose in-house efforts haven’t been effective, outsourcing fraud management to a third-party can make it more manageable.

Studies also show that 77% of merchants have reported that recent updates to card brand compelling evidence requirements—expanding the types of evidence that can be submitted to allow merchants to build stronger cases—have also helped block friendly fraud.

Start with clean, robust data
One of the instrumental components of effective fraud management is robust data. First-party misuse can usually be successfully identified with organized and accessible data. Making sure your data is clean and that your collection systems are optimized is critical for prevention. When clean data is used alongside fraud management tools, it becomes easier to detect and prevent all types of fraud.

Clear payment descriptors can also help eliminate customer confusion and prevent accidental disputes from being initiated. The more detailed your descriptors are, the more likely customers are to remember and understand them—reducing the likelihood of friendly fraud. Chargebacks and disputes typically peak during holiday seasons, so preparing beforehand by updating your fraud management tools and tactics can help you stay ahead of fraud trends.

More on this year’s fraud trends    
For a deeper dive on friendly fraud and other fraud trends that have emerged this year, read the 2025 Global eCommerce Payments & Fraud Report. There’s lots of great information to help you start improving your defenses against friendly fraud today!

1. 2025 Merchant Fraud Journal – Quantifying the challenge of friendly fraud