Friendly fraud — where a customer receives your service and then falsely claims they didn't authorise the payment — is a growing problem for Indian businesses accepting international cards. This guide covers how to dispute fraudulent chargeback claims and win.
Types of International Payment Fraud Indian Businesses Face
Friendly Fraud (Most Common)
Customer receives your service, uses it, then files a chargeback claiming they didn't authorise the payment or didn't receive the service. Also called "first-party fraud."
Frequency: Estimated 60-80% of all chargebacks filed against digital service merchants are friendly fraud, not genuine unauthorised transactions.
Actual Card Fraud
Someone uses a stolen card to pay you. The legitimate cardholder later files a chargeback. You are not at fault, but you still lose the money unless your gateway provides specific fraud protections.
Subscription Fraud
Customer signs up for recurring billing, uses the service for a period, then disputes all charges as "not authorised" after cancelling improperly.
Evidence That Wins Fraud Chargeback Disputes
For a "not authorised" or "fraud" chargeback, you need to prove the cardholder DID authorise and benefit from the transaction.
Strong evidence package:
- IP address log at time of transaction — Shows the transaction was initiated from the cardholder's known IP geography (e.g., their city in the US). Gateway-provided data.
- Device fingerprint — The same device has made previous legitimate transactions. Shows this isn't a one-off stolen card usage.
- Login/usage logs — After payment, the cardholder logged into your platform, accessed content, used the service. Timestamped access logs are among the strongest evidence.
- Email correspondence — Email exchanges with the cardholder after purchase discussing the service, delivery, or follow-up. Proves they were aware of and engaged with the purchase.
- Delivery confirmation — Email confirmation of service delivery to the email address provided at checkout.
- Signed agreement or terms acceptance — Checkbox accepting terms at checkout ("I agree to Terms of Service and understand this is a non-refundable digital service") with timestamp.
- Previous successful transactions — If this cardholder has made prior purchases from you without dispute, this supports authorisation.
Step-by-Step: Disputing the Chargeback
Day 1: Notice received. Your gateway notifies you of the chargeback. Don't panic. Read the reason code carefully.
Day 1-2: Collect evidence. Pull IP logs, device data, usage logs, email correspondence, delivery records, signed terms.
Day 3: Write your rebuttal. Keep it factual, 3-4 paragraphs:
- What the transaction was for
- Evidence the cardholder authorised it (IP, device match)
- Evidence the cardholder used the service (login/usage logs)
- Why the fraud claim is inconsistent with the evidence Day 3-4: Submit via gateway dispute interface. Upload evidence package. Submit rebuttal. Confirm submission.
Day 5-45: Wait for card network decision. Visa and Mastercard have 30-45 day dispute resolution windows. No further action needed unless they request additional information.
Reason Codes to Watch For
| Code | Network | Meaning | Win Rate with Good Evidence |
|---|---|---|---|
| --- | --- | --- | --- |
| 10.4 | Visa | Card absent fraud | Medium |
| 13.1 | Visa | Merchandise/service not received | High |
| 13.3 | Visa | Not as described | Medium |
| 4853 | Mastercard | Cardholder dispute | Medium-High |
| 4863 | Mastercard | Not recognising transaction | Medium |
Prevention: Reduce Fraudulent Disputes Before They Happen
1. Clear billing descriptor. Your company name as it appears on cardholders' statements should be recognisable. "PLAYTOPAY" is better than "PRPM2026" or a truncated gateway code.
2. Terms acceptance checkbox at checkout. "I understand this is a digital service and agree to the refund policy: [link]." Timestamped and stored by your gateway.
3. Immediate delivery confirmation email. Sent automatically on payment. Contains what was purchased, how to access it, and your support contact. Creates a paper trail the cardholder can't ignore.
4. Proactive support response. Many chargebacks are filed because customers couldn't reach you. A support email responded to within 24 hours prevents most legitimate disputes from becoming chargebacks.
5. Clear, accessible refund policy. Make it visible. A customer who can find your refund policy and request a refund is less likely to go to their bank.
FAQ
How do I dispute a fraudulent chargeback from an international customer? Collect IP logs, device fingerprint, usage/login logs, email correspondence, and delivery confirmation. Submit via your gateway's dispute interface with a factual rebuttal. Win rates improve significantly with login/usage logs that prove the customer accessed your service.
What is the difference between friendly fraud and actual card fraud? Friendly fraud: cardholder made the purchase, used the service, then disputes it. Actual card fraud: a thief used a stolen card. Friendly fraud represents the majority of digital service chargebacks.
How long does an international chargeback dispute take? Card network review: 30-45 days for Visa and Mastercard. No action needed from you after submission unless the network requests additional information.