Media Statement Re: Facebook Ignoring Friendly Fraud

Following is a statement regarding recent reports that Facebook allegedly turned a blind eye to ‘friendly’ fraud, from Suresh Dakshina, president of Chargeback Gurus, a global leader in ecommerce chargeback and fraud prevention solutions.

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“This is an unprecedented situation where, allegedly, a massive company has all but ignored friendly fraud. This practice is highly risky and could ultimately cost Facebook, its audience and credit card holders considerable money in credit card chargebacks and possible exposure to true fraud,” said Dakshina.

“We are seeing how online entertainment, like video games, are being more and more targeted by criminals and fraudsters. However, by allowing friendly fraud to take place, it opens up the possibilities for the worst kinds of behaviors including account takeovers, credit card fraud and identity theft. All of these activities, including friendly fraud could end up resulting in a flood of disputed credit card charges, chargeback costs and chargeback fraud. This could do long-term and harmful damage to individuals, Facebook and game developers who are published on the Facebook platform,” Dakshina said.

“Ignoring friendly fraud is not a practice I would ever suggest any of our global clients to practice. It is a recipe for disaster as it can result in a long-term loss of revenues or a loss of trust with their customers.”

These simple strategies we believe can help Facebook lower chargebacks and refunds in the coming months without compromising their revenue.

  1. For high stake gamers, mandate the player enter the card holder cell number. Text a summary of the transaction for the week to the card holder cell phone. This can eliminate the chargeback and refund spikes since the card holder will be aware of the situation at the beginning.
  2. Restrict kids below a certain age on the daily spending limit in gaming.
  3. Analyze the chargebacks since every chargeback tells a story about your customer journey. We speculate that over 80% of chargebacks might be friendly fraud chargebacks and out of which you might have at least 50% adult gamers who are trying to take advantage of the situation and filing a chargeback with their card issuer.
  4. Utilize your internal team to dispute friendly fraud chargebacks or work with a third-party company who can provide better insights about your chargebacks and help recover the lost revenue.
  5. Blacklist gamers who have filed a dispute or requested refund to avoid future revenue loss.