Quantifying the Challenge of Friendly Fraud

More than 60% of merchants report an increase in first-party misuse (friendly fraud) over the past year, with half experiencing a 25% surge in incidents. New card network dispute rule changes starting in April 2023 now allow merchants to combat friendly fraud through qualified transaction data submission. While merchants often overestimate their in-house dispute management effectiveness, third-party solutions prove more successful, with merchants using only third-party tools losing just 1% of card payment revenue compared to 2.9% for those using only in-house systems. Data has become instrumental in managing time delays, unclear indicators, confusing descriptors, and seasonal variations that characterize friendly fraud disputes.

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In this guide, you'll explore

  • ✓More than 60% of merchants cite an increase in first-party misuse over the past year, with half experiencing a 25% increase
  • ✓New card network dispute rules starting April 2023 allow merchants to stop first-party fraud through qualified transaction data submission
  • ✓Merchants using third-party tools lose only 1% of card payment revenue versus 2.9% for those using in-house proprietary systems
  • ✓Data helps manage time delays, unclear indicators, confusing descriptors, and seasonal patterns in friendly fraud cases
  • ✓Only 35% of merchants rate their current measures as extremely effective against first-party misuse disputes

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