Is friendly fraud breaking new records?

According to a recent survey by Ravelin , 76% of online buyers have committed or considered fraud.

And that’s not all. Here are some interesting nuggets:

• 40% of shoppers actually committed fraud (36% “only” considered it).

• +45-year-olds are 2x more likely to commit fraud than other age groups.

• The most common fraud type (26%) is voucher abuse.

• Directly after it (25%) are shoppers that abuse “high spender” offers.

• “Living Costs Crisis” is no.1 reason, but twice as likely in the UK vs. DE.

The interesting thing about Ravelin’s survey, is that by surveying the “fraudsters” directly, we get exposure to motivations, rationalizations and habits that we usually don’t get when dealing with classical Stolen Identity fraud and such. It’s quite a comprehensive report and I recommend reading it, but let’s review some of their conclusions.

Firstly, we learn that most friendly fraud is considered a victimless crime. Actually, 82% of fraudsters don’t believe they are committing fraud. Shockingly, 42% of them have been encouraged by influencers on SM to commit fraud. Comes to show how socially acceptable this behavior is. Not only that, 21% of fraudsters even justify their actions saying companies over-inflate their prices.

Secondly, we learn it’s just too easy. In fact, 22% mention this reason for them committing fraud. Only 11% are actively looking for ways to get away with fraud, the rest are completely opportunistic!

Thirdly, it’s a transgressional behavior. Most people will repeat their offenses.

To that I’ll add two points that weren’t addressed directly:

• As fraud is opportunistic, easy and rationalized, I would not be surprised if much of it originates in bad customer experience. 

• I would also think that most businesses are simply unaware of their total consumer fraud losses. As the behaviors are complex, fragmented and span multiple journeys, it’s unlikely to be tracked well.

So what can businesses do against it? Well, that’s the $48bn question. Some thoughts:

• Mitigating friendly fraud is not a matter of fancy AI and tooling. It’s really a question of T&Cs, policies and processes.

• As a first step though, businesses need to heavily invest into processes that are rarely data-driven. Without clarity and with missing awareness, it’s unlikely they’ll know where to start or even be motivated to do so.

• If I’m indeed correct, after achieving clarity most businesses will find that their number one priority will be to fix bad customer experience in critical points. 10/10 experience is no longer only about repeat customers, but actually making sure they don’t come back with a vengeance.

• Lastly, it’s about branding. If businesses needed even more reasons to personify their brand, align their values with their customer base and authentically make decisions by them, they have it now.