Friendly fraud happens when a real customer disputes a legitimate charge, either by claiming they never received an order they actually got, never authorized a purchase they actually made, or simply forgetting the transaction. It now accounts for more than 45% of all chargebacks, according to Mastercard's State of Chargebacks 2025 report.
The term distinguishes it from criminal fraud committed by someone using stolen payment details. Friendly fraud comes from the account's actual owner, which makes it far harder to detect with tools built to spot stolen cards or fake identities.
Merchants typically see three patterns: a customer disputing a charge they forgot making, a customer claiming non-delivery for an order that did arrive, and a customer keeping a product while claiming a refund for a return they never shipped. Each looks identical to a genuine complaint on a standard dashboard.
Filing a chargeback through a bank is often faster and feels less confrontational than contacting a merchant directly, and card networks historically sided with the accountholder by default. That asymmetry gives customers little reason not to dispute first and ask questions later.
A store with clearly documented, independently verified policies gives itself something concrete to point to when a dispute is filed, order confirmations, delivery evidence, and a return process a bank can check against a published standard rather than the merchant's word alone. We cover the related shift toward return-specific fraud in why return policy abuse is now ecommerce's biggest fraud problem.
Welo Badge verifies a business's identity, security, and policy transparency against the Welo Trust Standard, giving both customers and payment processors an independent record to check. If chargeback disputes are eating into your margins, you can apply for Welo Badge.
Rise above the usual.
