Friendly Fraud vs. Chargeback Fraud: What is the Difference?

The Hidden Cost of Selling Online

Every ecommerce merchant knows the feeling: You get a new order, you ship the product, and you celebrate the sale. But weeks later,

you see a notification that makes your stomach drop: Chargeback.

The money is gone. The product is gone. And on top of that, you have to pay a dispute fee.

But not all chargebacks are created equal. To stop them, you first need to understand who you are fighting.

Is it a criminal mastermind using stolen data? Or is it a confused customer who forgot they bought something?

Here is the difference between Friendly Fraud and Chargeback Fraud (and how to stop both).

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What is Chargeback Fraud (Criminal Fraud)?

This is what most people think of when they hear the word "fraud."

Chargeback Fraud happens when a criminal uses stolen credit card details to buy products from your store.

• The Scenario: A hacker buys a list of stolen credit cards on the dark web. They place an order on your Shopify store for expensive items (sneakers, electronics) and ship them to a drop-off location.
• The Result: The real card owner notices the transaction on their bank statement and disputes it. The bank gives them their money back, and you are left with the loss.
• The Fix: This type of fraud is best stopped before the transaction is captured.

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What is Friendly Fraud?

Friendly Fraud is much trickier—and often more frustrating. Friendly Fraud happens when a legitimate customer makes a purchase but later disputes the charge.

Why would they do that?

1. Confusion: They don't recognize your store name on their bank statement.
2. Family Fraud: A child used their parent's card without permission.
3. Buyer's Remorse: They regret the purchase but don't want to go through your return policy, so they call the bank instead.
4. "Cyber Shoplifting": The customer claims the item "never arrived" just to get it for free.

Despite the name, there is nothing "friendly" about it. It hurts your bottom line just as much as criminal fraud.

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Why "Manual Capture" is Your Best Defense

Most Shopify stores are set to Automatic Capture. This means the moment an order is placed, the money is taken. If that order turns out to be fraudulent (friendly or criminal),

you are already in trouble. Even if you refund it later, you might still get hit with fees or penalties.

The secret to stopping chargebacks is Manual Capture. By reviewing orders before the money is taken, you maintain control.

• Criminal Fraud: You can void the transaction immediately. No fees.
• Friendly Fraud: You can reach out to the customer to verify the order details before shipping.

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How AlphaGuardX Solves the Dilemma

The problem with Manual Capture is that it takes time. You cannot sit in front of your computer 24/7 reviewing every order.

That is why we built AlphaGuardX. It acts as your automated investigation unit:

1. We Automate Manual Capture: Low-risk orders are captured instantly, so good customers experience zero friction.
2. We Challenge Suspicious Orders: If an order looks risky (Medium or High risk), we automatically place it on hold and send a Smart Verification challenge to the customer.
3. Smart Custom Rules: You know your business best. With our Smart Rules Engine, you can define your own triggers This catches specific Friendly Fraud patterns that generic AI might miss.
4. We Create Evidence: By asking the customer to verify the transaction, we create a digital paper trail. This scares away criminals and forces "friendly" fraudsters to admit they made the purchase.

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Stop guessing. Start resolving.Don't let chargebacks eat your profits. Take control of your payments today.

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