Chargeback Fraud.

Often called 'friendly fraud': a cardholder makes a legitimate purchase, then disputes the charge with their issuer to obtain both the goods and a refund. It belongs to the Attacks & Threats category of cybersecurity.

Often called 'friendly fraud': a cardholder makes a legitimate purchase, then disputes the charge with their issuer to obtain both the goods and a refund.

Chargeback fraud, also known as friendly fraud or first-party fraud, occurs when a cardholder genuinely buys goods or services and then files a chargeback under reason codes such as Visa 13.1 ('Merchandise/Services Not Received') or Mastercard 4853 to obtain a refund while keeping the item. Card networks' consumer-protection rules (Regulation Z in the U.S., the UK Consumer Credit Act 75, PSD2 in the EU) shift the initial loss to the merchant, who then pays a non-refundable chargeback fee. Digital goods, streaming subscriptions, gaming microtransactions and high-value electronics are disproportionately abused. Defences include detailed proof of delivery, signed receipts, device fingerprinting, 3-D Secure 2 (which generally shifts liability to the issuer), velocity checks, and chargeback-alert services such as Ethoca and Verifi.

Defences for Chargeback Fraud typically combine technical controls and operational practices, as detailed in the full definition above.

Common alternative names include: Friendly fraud, First-party fraud, Chargeback abuse.