LP Magazine EU







Visa gets tough on 'friendly' fraud

Visa is stepping up payment protections for small businesses in the UK in a bid to tackle higher levels of 'friendly fraud'. 

Friendly fraud, also known as first-party fraud, is when a customer claims a legitimate purchase is fraudulent or says that they did not receive an item when they did.

Examples of this increasing practice include an online retail customer claiming that an item arrived damaged and requesting a refund, even though the purchase was in perfect working order, or a parent fraudulently claiming their child made a purchase on their device.

Data from the global card processor found that up to 20 per cent of card charge disputes could be first-party fraud, while nine in 10 small businesses have reported an increase in this type of fraud over the past 12 months.

Visa said that its new framework, Visa Compelling Evidence 3.0 (CE3.0), will give businesses more ways to show a disputed charge is valid and authorised by the cardholder.

It added that this would provide merchants with another layer of protection, claiming that the new measures would "not impact consumers who are making genuine claims".

CE3.0 now allows companies to provide records of two previous undisputed transactions using the same payment method.

These transactions must be between 120 days and 365 days old as of the dispute date and either the IP address or the device ID/fingerprint must match across all three transactions, along with one additional element of IP address, device ID/fingerprint, shipping address or account login ID.

With this additional evidence that demonstrates the validity of the disputed charge, businesses may then be able to keep the money received from the original transaction.

Visa added that its "strong customer protection" through its Zero Liability Policy means that customers will not be held responsible for unauthorised or fraudulent charges made with their Visa credentials. They could also get their money back when they genuinely don't get what they have paid for where the seller won’t refund.

“These new measures will help to ensure small businesses can conduct business safely and securely whilst maintaining the high level of customer protection through Visa’s Zero Liability Policy,” said Mandy Lamb, managing director of Visa UK and Ireland. 

“Fraud, in all guises, is a persistent threat that undermines trust in our financial systems, impacting businesses, individuals and livelihoods.

“Everyone loses with fraud, which is why it’s everyone’s responsibility to tackle the problem head on, and why we’re doing all we can to support businesses impacted by the problem,” she added.

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