Family Fraud
Recent news headlines highlight growing instances of family fraud in card-on-file, frictionless payment scenarios. Fighting disputes that result from such fraud cases can cause customer attrition and brand damage.
Due to a lack of visibility and authentication in frictionless transactions (such as in-app purchases), mounting a dispute response against a family fraud case – without knowing what transaction data to collect – can weaken your representment and limit your chances of successful recovery.
In short, fighting a chargeback where the merchant cannot provide a good argument that they are selling products and services “in good faith” can easily result as a black mark on that brand.
Due to a lack of visibility and authentication in frictionless transactions (such as in-app purchases), mounting a dispute response against a family fraud case – without knowing what transaction data to collect – can weaken your representment and limit your chances of successful recovery.
In short, fighting a chargeback where the merchant cannot provide a good argument that they are selling products and services “in good faith” can easily result as a black mark on that brand.
Expert Partners
As your partner, Verifi first and foremost stands as a champion of your brand. We are sensitive to your customers’ experience and your efforts to build and sustain longevity. Essential to our commitment as a supporting partner is providing you up-to-date information on industry changes, such as:
- New FTC regulations on digital payments
- Consumer protection standards set by CFPB
- Mastercard’s 2019 mandate on negative option billing models
- Card Association requirements and dispute process
As always, Verifi stands as your proactive, consultative partner to ensure best practices for:
- Mitigating risk of friendly fraud and family fraud
- Informed data collection for compelling evidence
- Effective chargeback representment for optimum profit recovery
Recommendations for Merchants
To help reduce friendly fraud and family fraud, we recommend implementing these basic steps for card-on-file, frictionless payments:
Provide transaction visibility prior to authorization
- Express a message to ensure that your customer is aware they are about to make a purchase
- Include the exact amount and billing method (card-on-file account) before they “click”
Brand Value:
Underscores your integrity in customer communication
Confirm the transaction with customer authentication 
- Examples of authentication requirements:
- Enter their payment card number or PIN
- Submit a biometric scan
- Respond to your text message and confirm with code entry
Brand Value:
Demonstrates that providing secure purchasing is a high priority
Follow up with a digital receipt
Demonstrates that providing secure purchasing is a high priority
Follow up with a digital receipt
- Send a confirmation email with full transaction details
Brand Value:
Expresses that you appreciate their business and provides an opportunity to extend marketing and sales
Expresses that you appreciate their business and provides an opportunity to extend marketing and sales
In the event of a dispute, including such data as compelling evidence will help build a stronger representment and a better chance of recovering your profits. In addition, it can help build customer longevity and reinforce your brand.