Friendly Fraud happens when a card or checking account initiates a chargeback for a purchase made with their physical card but the card was not stolen.
- Malicious friendly fraud: At first glance, there seems to be a contradiction in terms here. However, the fact is that these account holders know in advance that they’re going to request a chargeback. These bad customers have every intention of attempting to have their cake and eat it, by receiving an item, claiming it never arrived, and asking for their money back. This in now a criminal fraud under US law.