The 2017 holiday season has come and gone, but the fallout on the dispute and claims processing side will persist for several months.  If your payment operation lags behind the industry standard in risk protection and dispute management, it could be far greater than you think.

Consider benchmark data from payment systems provider ACI Worldwide, indicating the recent holiday season would experience “a 30 percent increase in omni-channel fraudulent activity compared with the same period last year”.  Another key insight projects a rise in attempted fraud average ticket value from $120 to $125, spelling trouble for business at a critical point in the year.

The principal culprit in this heist? Friendly fraud. Unlike other common themes of the holiday season – carolers, candy canes, festive decorations – “friendly fraud is anything but friendly”, to quote industry experts from Verifi.  In fact, friendly fraud can threaten death by a thousand cuts, posing a pressing and ever-present challenge for payment operations across the globe.

Friendly fraud, simply stated, is any event where a consumer attempts to recover money when no issue has in fact occurred with the payment or the goods or services rendered.  When a customer claims their order wasn’t delivered, when a cardholder complains their card was used illicitly, when a product arrives at its destination only to find the user dissatisfied with its functionality, a case of friendly fraud may be at hand.  Most consumers submit these claims for these reasons sincerely, but others do so nefariously, with their sights set on exploiting weaknesses within your fraud prevention and dispute processing environment.

The threat is nothing new, and it isn’t disappearing any time soon.  According to LexisNexis’ 2016 True Cost of Fraud Study, 28 percent of large eCommerce merchants identify friendly fraud as a major pain point, while 44 percent believe battling fraud is “too costly.” Since then, the volume of card-not-present transactions in the marketplace has only intensified – and with it, the headache caused by friendly fraud. How can you respond?

Implementing secure verification standards and comprehensive policies and protocols to catch fraud on the front-end is a prudent option for merchants, but even the most diligent businesses leave too much to chance with a preventative strategy alone.

The safest way to curb severe damage due to friendly fraud is by investing in systems that consistently limit losses on the back-end.  That means organizing documentation, routinely meeting stringent deadlines and regulatory standards, analyzing trends in the dispute life-cycle that minimize write-offs, and doing so with cost effectiveness.  Performing these tasks and more at the necessary capacity is only possible with a true, end-to-end case management system designed and implemented by world class dispute and exception-handling specialists. That’s where Lean Industries comes in.

Our flagship software product, AdjustmentHub™, empowers your business in the fight against friendly fraud without compromising on the need for customization or convenience. To learn more about how Lean Industries can transform your operations, don’t hesitate to contact us.

The holidays have come and gone, but fighting friendly fraud is a constant challenge.  By having the proper tools in place and a proven business partner at your side, fraud can be the last thing on your mind next holiday season. Are you ready to take the next step?