Jones & Walden, LLC - Bankruptcy

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Small business owners want to believe that their customers have genuine intentions, but this is not always the case. More and more consumers are engaging in friendly fraud and scamming businesses out of money. In a period of time when small businesses in Georgia do not have much wiggle room to stay afloat, too many instances of friendly fraud can have profoundly negative consequences.

Friendly fraud is so named because it starts out as a seemingly innocent transaction. A customer makes a purchase and then receives a product. The problem arises later, when he or she disputes the charge, claiming that it was fraudulent. So rather than return the product for a refund, the customer keeps the purchase and also receives a refund. He or she has just taken advantage of most credit card companies’ zero fraud liability protection.

Sometimes the card network will pay for the fraudulent claim, but it often falls on small business owners to cover both the disputed charge and the additional chargeback fee. In 2019 alone, consumers reported 270,000 instances of fraudulent credit card charges. It is difficult to discern which charges were legitimate and which were examples of friendly fraud.

Some credit card companies cover these charges, but may still try to stick small business owners with the cost. It can be confusing and overwhelming trying to comb through the company’s policy to see whether this is actually the case. This is why when facing new or repeated instances of friendly fraud, some small business owners find it helpful to speak with an experienced Georgia attorney.