Introduction
Fraud costs online businesses billions every year - and it could impact you too.
Online stores are an easy target for fraudsters, whether it’s a person or a bot, using stolen credit cards. And sometimes, the problem isn’t a criminal at all, but a real customer misusing the chargeback system.
A chargeback is when a customer disputes a payment and the bank refunds them, leaving you out of pocket.
As such, there's two categories of fraud and the chargeback that follows:
Friendly Fraud: A customer buys something and later disputes the payment, claiming they didn’t authourise it or didn’t receive the goods.
Identity Theft: Criminals use stolen credit cards to buy goods (like gift cards), which are then resold. When the real card owner notices, they request a chargeback.
This is a problem for you because you lose the sale, may get hit with chargeback fees, and end up with extra admin work - all while the gift card might already be spent.
How to prevent friendly fraud
This kind of fraud is usually just a mix-up with a real customer - not true fraud, but it can still lead to chargebacks and headaches.
The best way to avoid it? Make sure there’s no room for confusion or miscommunication.
1. Make it easy for customers to reach you
Add a reply-to email on all gift emails and receipts so customers can contact you directly. If they’re unsure about a charge, they’re more likely to ask you first - not their bank.
2. Get comfortable with your payment gateway
Know who on your team can access your payment system (or make sure it's you!). Keep it bookmarked on your web browser for quick checks, and learn how to search payments, issue refunds, and manage disputes - this can be through Google searches or using the payment gateway's dedicated support guides on their website.
3. Know how to re-send orders
If a customer says they didn’t get their gift card, it's nice and easy to re-send it on your Toggle dashboard. The gift card code stays the same, so there’s no risk of them spending it twice - even if they do have / or end up receiving the original gift card.
4. Make your bank statement name clear
Customers might dispute charges they don’t recognise on their bank statement.
Check your payment gateway settings and make sure your statement name matches your brand (or the name your customers will be familiar with) to avoid confusion and chargebacks.
How to prevent fraud from stolen cards (identity theft)
Fraudsters - or bots - use stolen cards to buy gift cards fast. Stopping them takes a few smart steps:
1. Use fraud prevention tools in your payment gateway
Your payment gateway has tools to help spot and block suspicious payments. Set up rules like:
Blocking cards being used multiple times in 24 hours
Blocking payments made by cards issued outside your country
Blocking cards with CVC verification fails
Read up on what tools your payment gateway has and how to get them set up:
2. Turn on notifications for fraud alerts
Set your payment gateway to notify you (by email or SMS) when there's a dispute or suspected fraud. Fraudsters spend fast - alerts help you act before it’s too late.
3. Know how to cancel fraudulent orders
If a payment is flagged on your payment gateway as fraudulent, cancel it on Toggle right away. That will void the gift card and make its balance zero.
4. Add a delay before gift cards activate
Fraudsters like to redeem cards immediately. Adding a short delay before digital gift cards go live gives you time to spot fraud and cancel the card.
You can set this delay using the Validity rules box when creating or updating gift cards.
Just be sure to balance this with customer expectations if some guests want to use their gift card right away.
Read more about feature built by Toggle to help reduce fraud: