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Comment by DanielDent | Hacker News Reader

"Friendly fraud" is not a Facebook-invented term. It's a term used and understood by card issuers, acquirers, and merchants.

Friendly fraud encompasses:

- Dissatisfied customers who don't find refuge in a refund policy/process

- Customers who are embarrassed by their purchases. This situation is commonly triggered when a significant other reads a credit card statement.

- Customers who spend beyond their means, and then look for a "solution" when the statement comes due

I find it weird the way Facebook seems to be using the term here. These are charges that were never contemplated by the cardholder. There is no "buyer's remorse" dimension.

Friendly fraud is specifically about charges that are agreed by the card holder, but they later change their mind and pretend otherwise.

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> Dissatisfied customers who don't find refuge in a refund policy/process

It's dangerous to label such things as fraud. Chargebacks are a consumer protection mechanism of last resort as well as a remedy for unauthorized charges. If a merchant doesn't deliver what they promised and doesn't issue the appropriate refund, the merchant is the one engaging in fraud.

As any seller on eBay can attest, it's definitely possible to deliver exactly what you promise and still have the customer demand a refund or chargeback.

Chargebacks are a mechanism that can definitely be abused and in those cases would be fraud. I don't see that as dangerous at all. Heck, in posts on these forums people brag about using chargebacks to cancel services because they didn't want to call or follow the guidelines set by the merchant to cancel an account. Whether they're in the right or not that's most certainly bordering abuse of the system.

Chargeback fraud is a large issue in the US and not enough is being done by card issuers because it is the consumers who make money for card issuers by spending. There is incentive to please them, as all costs get passed to merchants.

Those merchants don't always have clean hands, either. Lots of services where you can sign up with one click, but canceling requires a lengthy phone call during which they pressure you to stay. And the call has to be during business hours, hope your boss doesn't mind!

Imagine how much worse it'd be if the dispute process didn't exist. "Oops, our only cancellation department employee retired last year and we forgot to replace him!"

I see both sides here, but maybe this is where merchants need to enact stricter rules.

Like services that will gladly let you signup online but then require you call a phone number, with very long wait times and only during certain hours, to cancel. And then be harassed about a cheaper offer while you try to cancel.

I have been a merchant and dealt with erroneous chargebacks, but I have zero sympathy for companies that know exactly what they’re doing — trying to fatigue or confuse the customer into not canceling.

Making it hard to cancel a service is a blatant abuse of the system.

My sister-in-law works in a fashion store. They have a 14 day return policy assuming same condition. You be surprised how many people buy a dress, cut all the tags, wear it once to an event, and try to return it.

I disagree. Chargebacks are a feedback loop. If you’re taking care of your customers and being transparent about how much and when you charge them, surprise, you won’t have bad chargebacks rates.

If you try to blur that grey area and tilt towards deception (“maybe if we don’t tell them when it auto-renews, our churn will decrease”) then you deserve every single chargeback you get.

I don't think Facebook is accidentally misusing the term. They want to redirect sympathy from the cardholders to themselves by framing the situation as if it were just a case of "buyer's remorse", when really they've intentionally built the system to incur these mistaken charges.

Most probably Facebook didn't make the games themselves. And I thought one had to be at least 13 years to use Facebook, but probably some parents are allowed younger kids access.

Average age of angry bird user was 5 the article says

Really? I thought the presence of the brand was bigger (back in the day) than that would allow for. An average age of 5 puts a pretty sharp limit on the number of 30-year-olds who can play. They're not going to be balanced out by one -20-year-old each.

"Average" in this case may refer to mode, not mean.

That’s not how I’ve heard the term used. The meaning I’m familiar with is “person closely known to the card holder incurs a charge that isn’t really authorized”, for example you might have access to their computer but aren’t supposed to use their saved credit card info for purchases. For example, companies ask for the ability for websites to do biometric authentication via TouchID/FaceID to combat friendly fraud. That wouldn’t make sense under your definition.

> I find it weird the way Facebook seems to be using the term here. These are charges that were never contemplated by the cardholder. There is no "buyer's remorse" dimension.

It's my understanding that it's the responsibility of the cardholder to "contemplate" the consequences of delegating charges to others. What Facebook maybe should do in this case is make it painfully obvious that other users of one's Facebook account could incur additional charges without reentering the payment card information.

Wikipedia seems to agree with you:

https://en.wikipedia.org/wiki/Chargeback_fraud

Exactly. I think chargebacks are a feedback loop, especially because we have percentages to compare to other businesses. And as the article stated, Facebook’s was 10x the norm.

This was not “friendly fraud.” This was straight up fraud, with clear intention by Facebook employees to defraud parents by using children in a disgusting way as their pawns.

Facebook used the term in the same meaning as the rest of the industry, and in the same meaning that you explained. You can read the original doc linked in the article to confirm that.

The article's author lied. They told the readers that FB encouraged fraud, while in fact FB was actually encouraging devs not to fight the chargebacks.

Not that I'm defending FB. They knew the chargebacks were very frequent, so they should have addressed the root cause by adding more verifications before a card can be used. But they were definitely not telling devs to commit fraud.

>I find it weird the way Facebook seems to be using the term here.

In my experience fraudulent chargebacks for payments processed without liability-shifting authentication (3D secure etc) are typically lumped together as "friendly fraud". Regardless of origin. With digital purchases, especially fungible ones like game credits, there exists quite a lot of organised fraud exploiting "one-click" checkout chargeback SOPs.

Could the similar name be a coincidence?

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