Understanding the Friendly Fraud
Card not present (CNP) credit and debit card transactions provide the perfect environment for what’s commonly referred to as friendly fraud.
A CNP transaction as a payment card transaction where the cardholder does not or cannot physically present the card for a merchant’s visual examination. At the time of order delivery and payment. Such as for mail-ordering transactions by mail or fax, or over the telephone or internet.
Therefore, friendly fraud occurs when a consumer makes an online shopping purchase with their own credit card and then requests a chargeback from the issuing bank after receiving the goods or services.
Categories of Friendly Fraud
The deliberates falsification of facts by a consumer which is intended to deceive a merchant.
Reasons for intentional friendly fraud may have to do with buyer’s remorse. Perhaps the buyer has an impulse purchase for an amount that exceeds their comfort level or their financial circumstances. Suddenly changes take place. And, they wish they can get back money or maybe, their spouse doesn’t approve of the purchase.
Then, there are fraudsters who commit online shoplifting by buying merchandise online and then disputing the transaction after the merchandise reach home. In this way, they can enjoy the merchandise for free, just like shoplifters at brick-and-mortar stores.
Thieves Use Your Credit Card
It’s an open secret how easy it is that anyone, with just a few dollars, can buy valid and stolen credit card information on the internet... and law enforcement and banks are doing little to stop it, say security experts.
It’s estimated there were nearly 1,500 credit breaches in 2017.
Equifax admitted to having the credit information of 143 million people exposed to hackers and the theft of 209,000 credit card numbers.
Some of the stolen information winds up on 'carding' websites that sell everything needed to use the credit card online or the magnetic strip of information on a credit card.
One website operating with an IP address in Eastern Europe has been operating for at least four years in plain view of law enforcement, and the banks that underwrite the credit cards.
The site, which we will not name, has a sophisticated search engine that lets users find cards by type: Visa, Mastercard, American Express, Gold, Platinum and Chairman’s; by the issuing bank, debit or credit and possibly most important, ZIP code of the card’s owner.
Thieves know if a stolen credit card is used for moderate amounts in the same zip code as the card's owner, it’s less likely to be immediately flagged for fraud.
And many of the sites offer what’s called a checker. Once the stolen information is purchased, mostly like with a cryptocurrency like bitcoin, the buyer can run the information through a check to see if the card numbers are still valid.
It’s estimated there were nearly 1,500 credit breaches in 2017.
Equifax admitted to having the credit information of 143 million people exposed to hackers and the theft of 209,000 credit card numbers.
Some of the stolen information winds up on 'carding' websites that sell everything needed to use the credit card online or the magnetic strip of information on a credit card.
One website operating with an IP address in Eastern Europe has been operating for at least four years in plain view of law enforcement, and the banks that underwrite the credit cards.
The site, which we will not name, has a sophisticated search engine that lets users find cards by type: Visa, Mastercard, American Express, Gold, Platinum and Chairman’s; by the issuing bank, debit or credit and possibly most important, ZIP code of the card’s owner.
Thieves know if a stolen credit card is used for moderate amounts in the same zip code as the card's owner, it’s less likely to be immediately flagged for fraud.
And many of the sites offer what’s called a checker. Once the stolen information is purchased, mostly like with a cryptocurrency like bitcoin, the buyer can run the information through a check to see if the card numbers are still valid.
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