Visa has said it will change its dispute programme next year to help crack down on first party misuse or 'friendly fraud'.

Friendly fraud cases can include customers refuting valid purchases such as forgotten recurring subscriptions, or children given access to use their parent’s card to make purchases with parental approval.

Visa said that because none of these purchases are considered unauthorised by the cardholder, the chargebacks “negatively impact merchants in both cost and time spent responding to the false claim”.

This can lead to losses up to double the primary transaction cost, according to the global payments company.

It said that from April 2023, if merchants can provide additional data or evidence to show that the disputed charge is valid then the dispute will be rejected by Visa.

“Friendly fraud is not always friendly, especially from a merchant’s perspective,” said Mike Lemberger, senior vice president of North America risk at Visa. “At Visa, we’re evolving our disputes programme using technology and insights that help level the playing field for the entire ecosystem.

“When we give merchants and issuers the tools to take more fraud out of the equation — everyone wins.”

A recent study by technology provider SIFT found that almost one in five consumers who have filed a chargeback dispute have committed first party fraud by submitting false claims to get their money back on legitimate purchases.

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