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12/30/2024
How Financial Institutions Are Fighting Friendly Fraud
PaymentsJournal
Last year’s TikTok-fueled spate of check fraud—allegedly taking advantage of a glitch at Chase Bank—was among the most widely publicized fraud cases of the year. The scheme involved individuals depositing fraudulent checks and withdrawing funds before the bank could verify their validity.
Most of these participants may not have realized they were committing a crime. A study from Javelin Strategy & Research, 2025 Fraud Management Trends, looks at the TikTok scheme within the larger context of friendly fraud and explores what banks can do to fight it. The report also delves into other emerging trends, including the growing use of passcodes and digital wallets.
Defining Friendly Fraud
Friendly fraud, also known as first-party fraud, happens when consumers dispute legitimate charges, often resulting in a refund. The dispute may involve the consumer claiming an unauthorized purchase was made using their account or that a purchase was not received or turned out to be defective.
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