# When Customers Lie: How to Fight Friendly Fraud > Friendly fraud happens when a customer files a chargeback on a legitimate purchase instead of requesting a return. In 2025 it accounted for 61% of all disputes and cost merchants over $100 billion. Merchants fight it with a combination of clear communication (order confirmations, return policies, delivery signatures) and a fraud prevention solution that handles chargeback disputes end to end. Left unchecked, friendly fraud pushes a merchant's chargeback rate past the 1% threshold, triggering high-risk status and higher processing fees. ## Key facts - Friendly fraud accounted for 61% of all ecommerce disputes in 2025 - Friendly fraud cost merchants over $100 billion in 2025 - According to the LexisNexis True Cost of Fraud Study 2025, every $1 of fraud costs U.S. merchants $4.61 in total - Card networks set the chargeback threshold at 1% of transactions before triggering monitoring programs - 65% of declined orders are legitimate, creating false decline risk when fraud filters are too aggressive - 41% of customers who experience a false decline will permanently take their business elsewhere ## Frequently asked questions ### What is friendly fraud? Friendly fraud occurs when a customer who placed a legitimate order files a chargeback with their bank instead of returning the item or contacting the merchant. It can be intentional (deliberately exploiting the dispute system) or unintentional (forgotten subscriptions, unrecognized billing descriptors). In 2025 it accounted for 61% of all ecommerce disputes. ### How much does friendly fraud cost merchants? According to the LexisNexis True Cost of Fraud Study 2025, every $1 of fraud loss translates to $4.61 in total cost for U.S. ecommerce and retail merchants once chargebacks, fees, and merchandise replacement are factored in. ### What is the chargeback threshold that triggers high-risk status? Card networks typically set the chargeback threshold at 1% of transactions. Merchants who exceed that rate are placed in chargeback monitoring programs and charged higher processing fees. Sustained violations can result in account termination. ### What are the most effective steps to prevent friendly fraud? The eight core steps are: (1) build personal customer relationships so disputes feel uncomfortable, (2) send immediate order confirmations with billing descriptor and delivery estimate, (3) communicate return and refund policies at every touchpoint, (4) require delivery signatures on high-value orders, (5) make customer support easy to reach via multiple channels, (6) keep customers informed with tracking updates, (7) implement a fraud prevention solution with machine learning and human review, and (8) use end-to-end chargeback management to dispute fraudulent claims. ### What is the difference between friendly fraud and a legitimate chargeback? A legitimate chargeback is filed when a customer never received an order, was charged for a cancellation that did not process, or cannot resolve the issue directly with the merchant. Friendly fraud is a dispute filed on a completed, correctly fulfilled transaction: the customer received the goods but disputes the charge anyway. ### Can fighting friendly fraud hurt legitimate customers? Yes. Overly aggressive fraud filters cause false declines, where valid orders are rejected as suspicious. Research shows 65% of declined orders are legitimate, and 41% of customers who experience a false decline will permanently take their business elsewhere. ### How does requiring a delivery signature help fight friendly fraud? A signed proof of delivery is direct evidence that the customer received the order. When a chargeback is filed on that transaction, the merchant can submit the signature record to the card issuer to dispute and win the claim. It is most cost-effective on high-value orders where the chargeback exposure outweighs the signature fee. ### What role does a fraud prevention solution play in fighting friendly fraud? A fraud prevention solution combines machine learning to flag suspicious patterns with human analysts who review edge cases. It also manages the chargeback dispute process end to end, gathering evidence, filing responses, and tracking outcomes, which is the defense layer merchants need once a dispute has already been filed. --- Source: [https://www.clear.sale/blog/8-steps-for-preventing-friendly-fraud](https://www.clear.sale/blog/8-steps-for-preventing-friendly-fraud)