One of the worst things that can happen to a merchant is friendly fraud or fraudulent chargeback. You get scammed for a product you have delivered or a service you have already given. Whether you’re a flea market vendor, a sole proprietor, business corporation or online marketer, receiving a charge can be very frustrating.

When the customer wins the case, you lose your merchandise even if the transaction was legitimate. Even if you were to win the case, you will suffer additional costs such as chargeback fees and credibility loss with the merchant services company.


The best way to avoid being scammed is catching the friendly fraud before it catches you. This way, you won’t complete the transaction, and you won’t have to deal with costly chargebacks. Here are top 5 ways to detect friendly fraud.

Watch Out For Unusually Large Orders

As a business owner, getting large orders may be exciting. Large orders mean that you’ll enjoy more profits. However, beware. What most merchants don’t know is that fraudsters who use stolen credit cards will often buy large quantities of a certain product.

Don’t process unusually ordinary larger orders until you have verified the order with the customer by looking up their phone number and calling them. You can find the phone number on the billing address. Call them and verify if’s them making the transaction.

Beware of Different Shipping and Billing Addresses

Be suspicious if the shipping address is different from the billing address. There may be no fraudulent activity but whenever this happens, call the customer to verify the order.

Fraudsters using stolen credit cards will always request that you ship the product to an address that is different from the billing address. Look up the card holder’s phone number, call them and confirm the order to prevent any issues in the future.

Suspicious IP Addresses

Another way to detect friendly fraud is a transaction coming from an IP in a high-risk country such as Ukraine or Russia. If the IP address does not match either the shipping or billing address, take that as a red flag. Especially if the order is being from high-risk countries, don’t complete the transaction.

Man Insert Pin Code

Also, watch out for several failed orders from different card numbers coming from the same IP address. The fraudster may be having several cards and he’s trying each one of them to see which one completes the order.

Beware of Fake Information

Fraudsters tend to use fake phone numbers and email address when making the order. Look at the e-mail address and phone number provided by the customer.

Does the area code match the cardholder’s city and state? If he/she is using a free Google, Yahoo or Hotmail account, does it match to the customer’s name? Is the phone number real or fake? Taking the time to verify this information will help to discover chargeback issues before they happen.

Same Card Transactions, Different Shipping Addresses

Fraudsters will often use the same card to make several transactions and ship them to different addresses. They will do this to prevent being caught should anything happen. Also, watch out for different card transactions, many different orders all going to the same shipping address. This may be a red flag indicating the use of stolen credit cards.


These are just some of the friendly fraud indicators. The rule of the thumb is, if an order seems suspicious, verify with the customer before completing. You will know whether they’re the ones who made the order or it was a fraudster. Also, investing in credit card fraud detection tools to protect your customers and your business is a wise choice.