Friendly Fraud
When a genuine cardholder disputes a legitimate transaction to get their money back, whether by mistake or on purpose.
Definition
Friendly fraud, also called first-party fraud, happens when the real cardholder files a chargeback for a purchase they actually authorised. It can be honest confusion, such as not recognising a billing descriptor, or deliberate abuse, such as claiming a deposit was unauthorised after gambling and losing it. In the gambling context it is a notable problem because a customer can lose funds and then attempt to reclaim them through their bank, leaving the operator with both the payout or wagered value and a chargeback fee. Strong authentication like 3-D Secure, clear descriptors, and good transaction records are the main defences, since they help prove the genuine customer approved the payment.
Worked example
After losing a deposit, a customer tells their bank the charge was unauthorised; the operator represents the dispute with 3-D Secure authentication logs showing the cardholder approved it.
Why it matters
For learners, friendly fraud shows that not every chargeback is real fraud. For professionals, it is a material cost that shapes authentication, evidence-keeping, and dispute strategy.