Apparently, switching to digital payment could bring even more trouble. If you’ve been thinking about shifting to digital payment platforms hoping that you would avoid fraud, you may be in for a rude shock.
The most popular kind of fraud in the digital world is called “friendly fraud.” You would wonder why someone had to call it “friendly” when indeed it refers to people being robbed of their hard earned money. But no, friendly fraud is not when someone breaks into your computer or Smartphone to steal your password and use it to withdraw money from your accounts. Rather, it is when a close friend, probably your spouse, authorizes a purchase and later claims that it was a fraud. As more transactions move away from cash, more people are tempted to earn an extra dollar using this method, a recent report shows.
Between 2012 and today, fraud cases have increased by a whopping 41%, said Monica Eaton-Cardone, who is the Chief Information Officer at Global Risk Technologies. Interestingly, instances of stolen credentials or chargebacks from merchant errors have declined.
In 2013, merchants lost an estimated 11.8 billion from friendly fraud, said the CFO. A large percentage of this came from chargebacks. Yet, according to most merchants, chargebacks are simply a cost of doing business. If you are an e-merchant, you should be worried about what you would potentially lose in case of a chargeback. The Global Risk Technologies study shows that of the consumers who file a chargeback and don’t encounter a problem, 40% will file another chargeback within three months and up to one-third within the next 90 days.
The report blames consumers for their negligence and ignorance to some extent. “If merchants don’t fight these cases, we will end up seeing more of this type of fraud,” said Eaton-Cardone.
Of course you have to give credit to chargeback protection providers who have worked so tirelessly to educate merchants on the importance of being extra keen with their accounts. But Eaton-Cardone believes that it shouldn’t stop there. The merchants’ banks should come in too if the war on “friendly” fraud is to be won.
You can’t continue ignoring these concerns because they can only hurt you. Fortunately or unfortunately, this time the buck stops with you. From today onwards, you must vow that you will take responsibility for all transactions on your cards and all other financial accounts; online or offline.