Friendly fraud in Australia: a fair guide for sellers

A customer says they never ordered. You have their name, address and a delivery record. Is it fraud, a forgotten purchase or a family mix-up? Often it is one of the last two, and your response should be built for that.

Friendly fraud in Australia is when a genuine customer disputes a legitimate card purchase with their bank, saying they did not authorise it or did not receive it. It is often a mistake, not a scheme. So treat every case as a records problem first, and never as an accusation.

This guide on friendly fraud in Australia is for you if:

A customer has disputed an order that you know was delivered to the address they gave.
You keep seeing "fraudulent" or "unrecognized" disputes and are not sure how many are real fraud.
You want a fair, evidence-led way to respond and to cut these disputes down.

Last updated: 10 October 2026. Written by the ChargeFix team. Reviewed against sources on 10 October 2026.

The 30-second answer (TL;DR)

Friendly fraud is an industry term, not a legal one. Shopify's own article defines it as a customer who makes a purchase and later requests a chargeback from their bank.

Shopify groups the causes into three: an accidental dispute, deliberate chargeback fraud, and refund abuse. In practice, honest confusion is common, so start with the facts, not suspicion.

On Shopify these disputes usually arrive as "fraudulent", "unrecognized" or "product not received". Each reason has its own evidence list on Shopify's reasons page.

You cannot call a customer a fraudster in your response. Describe what happened, attach the records, and let the bank decide.

Contacting the customer first often settles an "unrecognized" charge in a message. A lost dispute can cost far more than the order, because of the fee and the goods.

The best defence is prevention: a recognisable statement name, clear receipts, fraud analysis before you ship, and proof of delivery you can show.

Quick note: The word "fraud" in "friendly fraud" does not mean the customer has been found to have committed fraud. A bank has not decided that, and neither have you. Treat the label as shorthand for a dispute that looks wrong on your records, and keep your tone neutral in every message.

Friendly fraud at a glance

Question	Short answer
What is it?	A genuine buyer disputes a legitimate purchase with their bank
Is it a legal term?	No, it is industry shorthand; we did not find it defined on AFCA, ASIC or ACCC pages
How often is it a deliberate scheme?	We found no reliable current Australian figure, so we do not give one
Which Shopify reasons does it arrive under?	Fraudulent, unrecognized, product not received, credit not processed
What decides the case?	The customer's bank, using the evidence you submit
What is the best defence?	Records created before the dispute, plus a calm, factual response

What is friendly fraud in Australia, and what is it not?

Friendly fraud in Australia describes a dispute where the cardholder is the real buyer, but their claim does not match the records. Shopify's article, published in June 2024, defines it as a customer who makes a purchase and later requests a chargeback from their bank. It is not the same as a stolen-card fraud, where a criminal is the buyer.

Shopify's article lists three causes. The first is accidental: the customer forgets a legitimate purchase and does not recognise the charge. The second is chargeback fraud, where the customer wants the item but later claims it did not arrive or was not authorised, hoping to keep it for free. The third is refund abuse, where a customer takes a refund without returning the item. Our post on how chargebacks work in Australia sets the wider process out.

The article carries no updated date, so treat it as a 2024 description of the term. We did not use the survey figures in it, because they come from 2022 and 2023 and we cannot confirm they are current.

Why do we avoid calling customers fraudsters?

Because you often cannot know. A parent places an order and a teenager signs for it. A card statement shows a company name that does not match your shop. A partner who did not know about a gift reports a charge as unauthorised. In each case the customer genuinely believes the dispute is right. A response that accuses them can turn a misunderstanding into a complaint.

The bank is the decision maker. AFCA says cardholders should contact the merchant first, and that banks may ask how they tried to resolve it. Your job in a dispute is to lay out facts that make the bank's decision easy, not to prove intent.

Is it the same as card fraud?

No, and the difference changes your evidence. In genuine card fraud, someone used a stolen card, the real cardholder never saw the goods, and your proof needs to show who received them. In a friendly dispute, the cardholder or their household is likely to have the goods, so proof of delivery, a matching address and earlier messages carry more weight. Both can arrive under the same Shopify reason, "fraudulent", which is why you read the details before you respond.

Which Shopify dispute reasons does friendly fraud usually hide behind?

The most common reasons are "fraudulent", "unrecognized" and "product not received", with "credit not processed" and "duplicate" close behind. Shopify's reasons page lists the evidence it expects for each. You do not choose the reason, the customer's bank does, and the evidence you upload should match it.

Shopify's chargeback-reasons page, which we opened on 10 October 2026, gives these descriptions and evidence suggestions.

Shopify reason	What the customer is saying	Evidence Shopify suggests
Fraudulent	They did not authorise the charge	Fulfilment date and time, billing information, IP address and country, shipping and tracking
Unrecognized	They do not recognise the merchant name or location	The same list as fraudulent
Product not received	The goods did not arrive	Fulfilment date and time, billing information, shipping and tracking, and an activity log for digital goods
Product unacceptable	Defective, damaged or not as described	Fulfilment details, tracking, product descriptions or pictures from your store, and proof of any return or replacement
Credit not processed	They returned the item or cancelled but got no refund	Refund and return policies, when the customer was told, related emails, and proof of any prior refund
Duplicate	They believe they were charged twice	An explanation of the two charges, receipts for separate items, and communications
Subscription canceled	They were charged after cancelling	Cancellation policy, notices, and an activity log after the claimed cancellation date

Shopify says it automatically uploads a PDF of fulfilment events for "product not received". Our guide to responding to a Shopify Payments dispute shows how to add to that. The post on the chargeback evidence checklist for Australian Shopify stores gives a longer list by reason.

What does "unrecognized" usually mean in practice?

It usually means the statement entry did not look like your shop. A store called "Maple and Co" that bills as an unrelated parent company is a classic cause. Shopify's preventing-chargebacks page tells merchants to set a recognisable descriptor and send receipts for "fraudulent" and "unrecognized" disputes. A customer who sees a name they know, with an email receipt in their inbox, rarely needs to call their bank.

How do you tell genuine fraud from a friendly dispute?

You cannot tell with certainty, but Shopify's fraud analysis gives you signals before you ship: it rates eligible orders low, medium or high risk of a fraud chargeback. A mismatch does not prove fraud, and a clean order does not rule out a friendly dispute. Use the signals to decide how much to check, not to accuse.

Shopify says fraud analysis looks at indicators such as address checks, the card security code, location mismatches, unusual devices or networks and multiple card attempts. It adds a warning symbol to medium and high risk orders on the Orders page and may recommend that you fulfil, confirm with the customer first, or consider cancelling. The indicators need the Basic plan or higher, and the recommendations need the Grow plan or higher, or Shopify Payments. It applies only to verifiable online credit card orders.

Shopify's prevention page says address verification advice applies to the US, UK and Canada, not Australia. So do not rely on an address-match step that your market does not support. Shopify's fraud analysis page also states that it does not cover bank charge reversals, so treat a "low risk" rating as a guide, not a promise.

Signal	What it can mean	What it does not prove
Medium or high risk rating	A pattern linked to fraud chargebacks	That the buyer is dishonest
Billing and shipping addresses differ	A gift, an office or a stolen card	Fraud on its own
Several card attempts	A mistyped number or card testing	Intent
Customer cannot recall the order	A forgotten or household purchase	That they are lying
Delivered, signed, no contact before the dispute	Something is wrong on the customer's side or the records	That a deliberate scheme exists

What honest explanations should you rule out first?

Run through these before you assume friendly fraud.

Someone else in the household placed the order. A partner, parent or child used the card.
The statement name does not match your shop. The customer searched for you under a trading name.
A gift. The recipient sent a dispute message to the cardholder.
A delayed or missed delivery. The parcel was left in a spot the customer did not check, which our post on authority to leave and safe place delivery covers.
A recurring or split payment. The customer saw two lines and thought it was a double charge.
A problem they did not tell you about. They disliked the item and went to the bank instead of writing to you.

A short, friendly message asking about each of these settles many cases before they reach the bank.

What does friendly fraud in Australia cost you?

A friendly dispute costs the sale, the goods you shipped, the postage and, if you lose, the dispute fee. Shopify says the bank takes the amount immediately plus a fee. Third-party sources report A$25 for Australian stores, but we could not find the fee on Shopify's own pages, so confirm it with Shopify Support.

Illustration: an unrecognised charge on an A$64 order

A customer orders A$64 of goods. Your cost of goods is A$22 and postage is A$9.50. Shopify's Australian pricing page, checked on 10 October 2026, lists 1.7% plus 30 cents for the Basic plan online standard card rate, so processing is A$1.39 (1.7% of A$64 is A$1.09, plus 30 cents). The fee is the reported A$25.

Outcome	What happens	Net result
You message the customer first and they recognise the order	Sale stands	plus A$31.11 (A$64 less A$22, A$9.50 and A$1.39)
You refund after they complain	Sale reversed, goods and postage gone	minus A$32.89
Dispute filed and you lose	Amount and fee taken	minus A$57.89
Dispute filed and you win, fee returned	Amount returned	plus A$31.11

In friendly fraud cases like this one, a message that clears up the charge protects A$31.11 of margin. A lost dispute costs A$57.89. That gap of A$89 on an A$64 order is the reason to talk to customers early. If the fee is not returned on a win, the win falls to plus A$6.11.

Illustration: a repeat pattern

Suppose one account disputes three separate A$85 orders over a year. Each order cost you A$30 in goods and A$9 in postage, and processing is A$1.75 (1.7% of A$85 is A$1.45, plus 30 cents, rounded). That is A$40.75 of cost per order.

Item	Per order	Three orders
Sale taken back	A$85.00	A$255.00
Goods, postage and processing already spent	A$40.75	A$122.25
Dispute fee at the reported A$25	A$25.00	A$75.00
Net loss if all three are lost	minus A$65.75	minus A$197.25

Three lost disputes cost A$197.25 against A$255 of sales. The first friendly fraud dispute is a lesson in what happened. The second and third are the ones you can often prevent by changing how you handle that customer, which we cover below.

How do you respond to friendly fraud in Australia with evidence?

Respond to friendly fraud in Australia the way you would to any dispute: stay neutral, match your evidence to the reason Shopify shows, and tell the story in date order. Shopify gives you 7 to 21 days. Evidence can be edited until the due date but not after you submit, so build the file early.

Shopify's evidence rules are tight. Files must be PDF, JPEG or PNG, each up to 2 MB and 4 MB in total, with one file per evidence type, and links, audio and video are not accepted. The due date follows your store's timezone and is 11:59 PM if no time is shown. For Shopify Payments, the bank then decides, and it can take up to 75 days after you submit. There is no appeal. Our post on the Shopify chargeback deadline goes through each rule.

Illustration: a dated case for an A$310 order

A customer orders A$310 of goods on Wednesday 14 October 2026. You ship it and tracking shows delivery on Monday 19 October 2026. The customer disputes on Wednesday 11 November 2026, 28 days after the order and 23 days after delivery, as "product not received".

Step	Date	Notes
Order placed	Wednesday 14 October 2026	A$310
Delivered per tracking	Monday 19 October 2026	Matches the shipping address
Dispute opened	Wednesday 11 November 2026	Reason: product not received
Response window	Wednesday 18 November to Wednesday 2 December 2026	7 to 21 days
You submit	Friday 20 November 2026	Evidence ready early
Latest bank decision	Wednesday 3 February 2027	75 days after submission

The goods cost you A$140, postage was A$14 and processing was A$5.57 (1.7% of A$310 is A$5.27, plus 30 cents). Win with the fee returned and you are plus A$150.43. Lose and you are minus A$184.57 (A$140, A$14, A$5.57 and the reported A$25). Refund instead and you are minus A$159.57. The gap between losing and refunding is only the fee, which is why a strong case is worth fighting and a weak one is not.

Evidence	Why it helps	Where to get it
Fulfilment date and time	Shows when you shipped	Shopify order timeline
Tracking and delivery record	Shows delivery to the address given	Carrier tracking page, saved as PDF
Billing and shipping match	Shows the buyer used their own details	Shopify order
IP address and country	Shows where the order was placed	Shopify order, where shown
Earlier messages	Shows the customer engaged	Your inbox
Delivery photo or signature	Shows who received it	Carrier record

How should you word the response?

State dates and facts. Avoid accusations, guesses about motive or phrases such as "this is fraud". Say what you shipped, where, when and how it was delivered, and what contact you had. Here is a template you can adapt.

RESPONSE (neutral, factual)

Order [NUMBER] for A$[AMOUNT] was placed on [DATE] using the
billing details [CITY, STATE] and shipped on [DATE] by [CARRIER]
to the address provided at checkout, [SUBURB, STATE POSTCODE].

Carrier tracking [NUMBER] records delivery on [DATE] at [TIME].
[A delivery photo / signature record is attached.]

Before the dispute, the customer [placed previous orders on
DATES / contacted us on DATE about DETAIL / did not contact us].

Our statement name is [NAME]. A confirmation email was sent to
[EMAIL] on [DATE]. Our refund policy was shown at checkout and is
attached.

We believe the order was delivered as described and ask that the
dispute be resolved in our favour. We are happy to refund promptly
if the customer contacts us with any problem.

Attached: order summary, tracking record, delivery photo, email
confirmation, policy.

The last line of the body matters. It tells the reviewer you are open to resolving the matter, which is the opposite of an accusation. For other reasons, our posts on item not received disputes with Australia Post and tracking says delivered but the customer says not received go deeper.

How do you prevent friendly fraud before it happens?

Prevent friendly fraud with five habits: a recognisable name on card statements, a clear order email, fraud analysis before you ship, proof of delivery that you can show, and fast, polite customer service. Shopify's prevention pages recommend each, and together they remove most of the honest confusion behind these disputes.

Habit	What to do	Dispute reason it reduces
Recognisable statement name	Set a descriptor that matches your shop's name	Unrecognized, fraudulent
Receipts and confirmations	Send an order email with items, total and your contact details	Unrecognized, duplicate
Fraud analysis	Check medium and high risk orders before you fulfil	Fraudulent
Tracking and proof of delivery	Use a carrier that records delivery	Product not received
Clear policies	Publish returns and refund terms at checkout	Credit not processed
Fast support	Answer messages within a business day	All reasons

Shopify's own article recommends the same list, including verifying orders before fulfilment and using carriers that provide proof of delivery. Our upcoming posts on what to save at fulfilment and fraud prevention with fraud analysis and 3D Secure go further. We could not confirm from a current Shopify page how 3D Secure works for Australian stores, so we do not describe it here.

Use this checklist when an order is flagged medium or high risk.

BEFORE YOU SHIP A FLAGGED ORDER

[ ] Read the fraud analysis indicators on the order
[ ] Compare the billing and shipping details
[ ] Check the customer's email and name for obvious typos
[ ] Email the customer: confirm the order and the delivery address
[ ] Wait for a reply on high value orders
[ ] If no reply and the risk is high, consider cancelling and
    refunding (Shopify's recommendation options)
[ ] Note your decision and the time on the order
[ ] If you ship, choose tracked delivery and save the proof

What should the order confirmation say?

It should name the shop, list the items and the total, show the delivery address, and give a way to reach you. For friendly fraud prevention, a customer who can see all that in their inbox before a charge confuses them is much less likely to file "unrecognized". The same email later becomes evidence that you told them what they bought and when.

What should you do about repeat claimants?

For repeat friendly fraud, keep a factual record of each dispute and decide on a rule you apply to everyone. Shopify's article suggests blocking known serial offenders with automated rules such as Shopify Flow. Do this carefully and consistently, and never label a customer publicly. The record should say what happened, not what you think of the person.

A neutral internal note might read: "Order 1042, disputed as product not received, delivered and photographed, response submitted, lost." Three such notes against one email address is a pattern you can act on. Compare that with a vague comment such as "this customer is a scammer", which proves nothing and could cause trouble if the customer sees it.

Number of disputes on one account	Sensible step
One	Respond and offer help; treat it as a possible misunderstanding
Two	Review the pattern; require tracked delivery with signature on future orders
Three or more	Consider declining future orders from that account, applying the same rule to everyone

The three-dispute illustration earlier shows what the pattern costs: A$197.25 lost on A$255 of sales. Ordinary pre-sale checks would not have caught the first order, but a clear rule would have limited the damage afterwards.

Does winning a dispute help your record?

Not with the monitoring rate. Shopify says its monitoring counts all customer-opened disputes and a win does not remove one. A high rate can lead to a notification, a reserve and enrolment in a card network monitoring programme, though Shopify's page gives no numeric thresholds. See our post on chargeback rate and account health warnings in Australia.

What's different for Australian merchants?

Australian merchants should know that AFCA expects customers to approach the merchant first, banks must claim a chargeback when the scheme allows it, and the evidence Shopify asks for is the same worldwide. The local differences are in the address check, the fee, the consumer rights and the payment methods.

Address verification. Shopify's prevention advice on address checks names the US, UK and Canada, not Australia.
Customers should contact you first. AFCA says so on its chargebacks factsheet. A customer who skipped that step is easier to resolve by reaching out.
Banks must claim when a right exists. AFCA says a bank must claim a chargeback if the scheme gives a right and the customer shows they paid and did not receive the goods. A customer with a plausible story will often get through.
AFCA cannot review the scheme's decision. It checks whether the bank made reasonable efforts, and a complaint is against the bank, not you.
Unauthorised transactions have their own rules. The ASIC ePayments Code covers unauthorised electronic transactions for consumers dealing with a subscribing bank, but it is described by ASIC as presently voluntary and it excludes business-purpose facilities.
The fee needs confirming. Shopify's Australian pricing page lists no dispute fee. Third parties report A$25, and NAB charges its own merchants A$25, so check before you budget.
Consumer law runs alongside. An Australian customer may be entitled to a remedy under Australian Consumer Law even if their dispute fails, which is why a polite offer to resolve it matters.
Other payment methods differ. Afterpay, Zip and PayPal use their own dispute systems, and the details we found are not confirmed for Shopify stores.

For the full sequence, see how chargebacks work in Australia and chargeback vs refund in Australia.

What mistakes make friendly fraud in Australia worse?

The most damaging mistake with friendly fraud is replying with an accusation. It changes the tone of a case that might have been a simple mix-up, and it gives the reviewer nothing to weigh. The other mistakes are missing records, ignoring early contact, and applying rules to some customers and not others.

Accusing the customer in your response. Describe facts. The bank decides what they mean.
Ignoring the customer until the dispute lands. A friendly message before a dispute resolves many "unrecognized" cases.
Relying on a low risk rating. Shopify says fraud analysis does not cover bank charge reversals.
Using an unsupported address check. Shopify's address advice names other countries, not Australia.
Missing proof of delivery. Without a tracking record or delivery photo, a delivered order is hard to defend.
Fighting every case. On small orders, the reported fee can exceed your margin, as the A$64 illustration shows.
Skipping the early refund. A full refund ends an inquiry. Our post on refunding a customer who opened a dispute covers the timing.
Keeping no notes. Without a dated record, a pattern is invisible until it is expensive.

Frequently asked questions

What is friendly fraud in Australia?

It is when a genuine customer disputes a legitimate card purchase with their bank, saying they did not authorise it or did not receive it. Shopify's article describes it as a customer making a purchase and later requesting a chargeback. It is industry shorthand, not a legal term, and it is often an honest mistake.

Is friendly fraud illegal in Australia?

We did not find an Australian source that defines friendly fraud as an offence, and we are not lawyers, so ask one if you need that answer. You also cannot prove intent from a dispute alone. Treat each case as a records question and let the bank decide.

How do I know if a dispute is friendly fraud or real fraud?

You usually cannot be certain. Shopify's fraud analysis rates orders low, medium or high risk using signals such as address checks, device and location, but it does not cover bank charge reversals. Look at who received the goods, whether the customer contacted you, and whether the statement name matches your shop.

Which Shopify dispute reasons does it appear under?

Most often "fraudulent", "unrecognized" and "product not received", and sometimes "credit not processed". Shopify's reasons page lists the evidence for each. For fraudulent and unrecognized, it suggests fulfilment date and time, billing information, IP address and country, and shipping and tracking information.

Can I stop friendly fraud completely?

No, but you can reduce it. Set a recognisable statement name, send clear receipts, check flagged orders before you ship, keep proof of delivery, and reply to customers quickly. Shopify's prevention pages recommend these steps. A win also does not remove a dispute from your chargeback rate.

Should I refund a customer who disputes a delivered order?

It depends on the order size and your evidence. If an inquiry is open, a full refund ends it. If a chargeback is open, you cannot refund it and must respond or accept. On small orders, the reported A$25 fee often makes an early refund cheaper, as the A$64 example shows.

What should I say to a customer I think is making a false claim?

Say nothing about intent. Write that you have a delivery record, quote the date, and ask whether anything went wrong so you can help. Offer a refund or fix if there is a genuine problem. That keeps the message fair and gives you a clean record if the dispute continues.

Does a won dispute count against my chargeback rate?

Yes. Shopify's monitoring page says the rate counts all customer-opened disputes, and winning does not remove one. A high rate can lead to a notification, a reserve and card network monitoring. The page gives no numeric thresholds, so watch your own rate under Settings, then Payments.

Can a customer complain to AFCA about my response?

A customer can complain to AFCA about their bank's handling. AFCA says it checks whether the bank made reasonable efforts and cannot review a card scheme decision. The complaint is against the bank, not you, but your records may be needed if the bank re-opens the matter.

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