Friendly fraud: when a customer disputes a purchase they really made

What friendly fraud is

Visa’s own page on the subject describes friendly fraud as a cardholder disputing a legitimate purchase that they, or someone in their household, made, often to get a refund while keeping the goods or services. Visa calls it first-party misuse, to set it apart from third-party fraud, where a stranger uses stolen card details.

The dispute usually reaches the merchant as a chargeback: the cardholder goes to the bank that issued the card rather than to the merchant, and the bank raises the dispute through the card network. Zolution’s guide to chargeback fees and ratios explains what each chargeback costs. Not every friendly-fraud case is dishonest; Visa’s page lists honest confusion among the causes.

How the dispute is raised under Visa’s rules

Visa’s rules (chapter 11) sort disputes into Fraud, Authorisation, Processing Errors and Consumer Disputes. A friendly-fraud case can arrive under either of two kinds, depending on what the cardholder tells the bank.

• As fraud: condition 10.4 (Other Fraud, Card-Absent Environment) covers a cardholder who denies authorising or taking part in an online or other card-absent transaction. The issuer must report the fraud to Visa before raising the dispute.
• As a consumer dispute: for example condition 13.1 (merchandise or services not received) or 13.3 (not as described or defective). Here the cardholder accepts making the purchase, and for these conditions the rules ask that the cardholder first tried to resolve the problem with the merchant.

The difference matters for the merchant’s response. A fraud claim is answered by showing that the cardholder took part in the transaction; a consumer claim is answered with evidence about delivery, the description of the goods, or the merchant’s refund and cancellation terms.

Compelling Evidence 3.0 and the 24 October 2026 change

Compelling Evidence 3.0 is the common name for a Visa rule that treats some card-absent fraud disputes as invalid when the merchant’s records show the same cardholder buying before without complaint. Visa’s summary of changes in the April 2026 edition says that from 24 October 2026 Visa expanded the rule “to further reduce friendly fraud”, and that earlier transactions at one or more merchants can now count.

As the rules read for disputes processed on or after 24 October 2026 (section 11.7.5.3, Table 11-28), a condition 10.4 dispute is invalid when all of the following hold:

• The same card, or a payment credential linked to it such as a token, was used in 2 earlier transactions that the issuer did not report to Visa as fraud.
• Those transactions were processed more than 120 calendar days before the dispute was submitted, and not more than 365 calendar days before it.
• A detailed description of what was bought is provided for the disputed transaction and the 2 earlier ones (for some authenticated online transactions, the purchase order number sent to the cardholder may be used instead).
• The earlier transactions match the disputed one on the device ID, device fingerprint or IP address, and on at least one more of the listed details: the customer account or login ID, the full delivery address, the device ID or fingerprint, or the IP address. Device ID and device fingerprint count as one element, and the rules set formats for each, for example a device ID of at least 15 characters in clear text.

The same evidence can be given after the dispute, with a pre-arbitration attempt (section 11.7.5.6). The rules also list other allowable compelling evidence for card-absent fraud, such as proof of delivery to an address that matched the card’s address check, or for digital goods the download date with details such as the IP address and device ID (section 11.5.1, Table 11-6).

Separately, an issuer whose cardholder raises 5 or more fraud disputes within 12 months must review the account to decide whether first-party fraud abuse is occurring (section 10.4.7.3).

Why it shows up in your ratios

A friendly-fraud dispute counts like any other. Visa’s acquirer monitoring programme (VAMP) adds fraud reports and disputes together and divides them by settled card-not-present transactions, so a merchant can reach a high ratio without any third-party fraud at all. Zolution’s guide to the programme explains the thresholds.

Visa’s fact sheet (file dated May 2025) excludes from that ratio the fraud reports that qualify for Compelling Evidence 3.0 and the disputes resolved through pre-dispute solutions, each depending on when Visa’s data is extracted. Your provider’s own agreement may measure disputes differently; ask how it treats a dispute you won or resolved before it became a chargeback.

What a merchant can do, and what it must not do

Visa’s page points to steps that start before any dispute: a billing descriptor customers recognise, order, renewal and delivery confirmations, refund and cancellation terms that are easy to find, and an easy way to contact the merchant first. It also names pre-dispute services, such as Verifi’s Order Insight, which the page says shows purchase details to the issuer and cardholder before a dispute is filed. These services may carry their own fees.

Keeping honest records is what makes Compelling Evidence 3.0 work: the device, IP address, login and delivery details of each order, kept in the form the rules ask for. What the rules do not allow is inventing or altering those records. Section 10.4.2.1 says that if Visa determines a merchant is falsifying data to gain this protection, Visa will notify the parties, and the merchant can no longer use this evidence route on the affected card until the acquirer, merchant or service provider confirms in writing that the activity is corrected.

• Ask a provider how it handles disputes: whether it submits Compelling Evidence 3.0 for you, what data fields it needs, and your deadline to respond.
• Ask whether pre-dispute or alert services are offered, and the fee per event.
• Ask how a dispute you win, or resolve before it becomes a chargeback, is counted in the provider’s own chargeback ratio.

Zolution’s proposal terms show the chargeback fee and the alert fee as separate, optional rows, so offers can be compared line by line. Zolution is a free marketplace (Zolution Standard membership costs nothing). Coverage is provider-declared and the provider decides. Zolution processes no payments, holds no funds and approves nobody.

Questions, answered