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Clearly there is nothing friendly about this shade of primarily online fraud, and small business owners are feeling the most impact.

The most common drivers of friendly fraud are well-intentioned customers who experience buyer’s remorse and don’t understand the difference between a traditional return and a chargeback. They assume it is a different way to get their money back, like a regular return.

Also perpetuating the problem is the rise of family members sharing accounts and storing payment credentials on different devices, making it easy for children, teenagers and spouses to make purchases and forget to inform each other that the purchase was made. Other customers and cardholders knowingly exploit loopholes in the chargeback rules.

Regardless of the intent of the customer, the result is the same for the merchant: The customer has the goods or services and a refund, and the merchant books a loss.

After studying the surge in friendly fraud, payments experts have offered suggestions for how merchants can reduce the frequency and consequences – some of which may seem counterintuitive.

Experts suggest some businesses relax their exchange policies. Accepting returns is usually less costly than losing chargeback disputes. Businesses are also encouraged to work directly with a cardholder to resolve their issues with the purchase.

Here’s a list of additional friendly fraud prevention techniques:

  1. Make sure your refund and cancellation policies are easy to find and follow.
  2. Keep a well-organized paper trail for all transactions.
  3. Represent your business well and use thorough product descriptions, quality photographs and intuitive billing descriptors.
  4. Monitor shipments and maintain delivery confirmations.
  5. Even though a cardholder has opted in and agreed to recurring payments, notify the customer each time before charging the recurring payment.
  6. Fully understand the credit card network and issuer’s chargeback policies.