1. The Legal Mechanics of Friendly Fraud
Friendly fraud is legally distinct from identity theft because the transaction is technically authorized by the cardholder at the point of sale but is retroactively repudiated through deceit.
The perpetrator uses their own verified information to bypass fraud filters. This makes detection nearly impossible at checkout. The fraud occurs days or weeks later when the dispute is filed under codes such as Item Not Received or Services Not Provided.
We analyze the terms of service and the digital footprint of the transaction. We prove authorization through IP address geolocation, delivery confirmation, and digital usage logs. We argue that the dispute is a breach of contract and a fraudulent misrepresentation.
Abuse of Regulation Z and Consumer Protections
Federal regulations give consumers strong rights to dispute charges. Banks often default to believing the customer to avoid regulatory penalties. This creates a shoot first, ask questions later environment.
We help merchants navigate this regulatory bias. We structure their checkout flow and terms and conditions to create a bulletproof evidence trail. When a dispute is filed, we use the specific language of Regulation Z to argue that the bank has no legal basis to grant the chargeback. We demonstrate that the consumer failed to attempt to resolve the issue with the merchant, which is often a prerequisite for a valid dispute.
Merchant Representment and Arbitration
The process of fighting a chargeback is called representment. If that fails, the case can go to arbitration with the card network. This is a quasi-legal proceeding with strict evidentiary rules.
We take over this process for high-value disputes. We do not use template letters. We draft legal briefs that present the compelling evidence required by Visa and Mastercard. We track the user activity on the website to show they accessed the digital product after the purchase. We use social media evidence where the user is wearing the stolen item. We fight to win the arbitration and recover the funds.
2. Criminal Prosecution of Refund Fraud
While traditionally a civil matter, the Department of Justice has begun aggressively prosecuting refund fraud rings under federal wire fraud statutes when the conduct is systematic and involves significant losses.
Prosecutors view this as a scheme to defraud the financial system. If an individual uses scripts or social engineering to generate thousands of dollars in fake refunds from major retailers, they face decades in federal prison.
We defend clients against these serious charges. We challenge the government proof of fraudulent intent. We argue that the returns were based on legitimate dissatisfaction with the products.
Wire Fraud and Access Device Fraud
Using the internet or a phone to falsely claim a refund is wire fraud. 18 U.S.C. Section 1029 criminalizes fraud in connection with access devices (credit cards).
We defend against the aggregation of these charges. Prosecutors will indict a separate count for every dispute filed. We argue that the conduct does not meet the statutory definition of an access device fraud if the user was the legitimate account holder. We scrutinize the evidence of deceit. If the retailer return policy was overly broad and the client simply exploited a loophole, we argue that is a contract issue, not a crime. We fight to decriminalize the conduct.
Conspiracy and Organized Retail Crime
Many prosecutions target groups that share methods for double dipping (getting a refund and keeping the item). The government charges these groups as conspiracies.
We defend the peripheral members of these groups. We argue that reading a forum post about how to get a refund does not make one a co-conspirator. We differentiate between the developers of the fraud scripts and the users who tried them once. We work to sever our client from the larger conspiracy to minimize sentencing exposure.
3. Civil Litigation and Asset Recovery
Merchants are increasingly bypassing the bank arbitration process and filing civil lawsuits directly against the consumers who commit chargeback fraud to recover damages and legal fees.
The friendly fraudster relies on anonymity. They believe the merchant will just absorb the loss. We shatter that illusion.
We file civil complaints for unjust enrichment, fraud, and breach of contract. We use the discovery process to expose the history of the fraudster.
Piercing the Digital Veil
We use subpoenas to Internet Service Providers (ISPs) to link the transaction to the physical location of the fraudster. We trace the delivery of the goods.
Once we identify the individual, we seek a judgment not just for the cost of the item, but for the chargeback fees and our legal costs. We argue that the act of filing a false dispute was an intentional tort. We act as a deterrent. When fraudsters realize that a merchant will sue them personally, they stop targeting that business.
The MATCH List and Merchant Survival
For merchants, the ultimate threat is being placed on the MATCH list (Member Alert to Control High-risk Merchants). This is a blacklist that prevents a business from opening a merchant account anywhere for five years.
We represent merchants fighting to get off this list. We argue that the issuing bank placed them on the list in error or without sufficient evidence. We litigate against the payment processors who failed to protect the merchant from fraud. We negotiate with the card brands to reinstate the processing ability of the business. We understand that for an online business, the MATCH list is a death sentence, and we litigate accordingly.
4. Defending Against False Allegations
In the aggressive sweep to stop fraud, legitimate consumers are often flagged as criminals and innocent merchants are shut down by risk algorithms.
We defend the rights of those wrongly accused of fraud.
We represent individuals whose accounts were frozen or who were banned from platforms due to suspicious activity. We prove that the disputes were valid.
The Mistake of Fact Defense
In criminal cases, we argue that the defendant genuinely believed they were entitled to the refund. If a subscription was difficult to cancel, or if the terms were hidden, the dispute was not fraud; it was a desperate attempt to stop a billing cycle.
We present evidence of the confusing user interface. We show the emails where the client tried to cancel. We use the good faith defense to negate the criminal intent. We argue that a frustrated customer is not a felon.
Identity Theft as a Defense
Often, a client is accused of chargeback fraud when their account was actually compromised. A third party may have used their card to buy goods and ship them to a drop house.
We use forensic analysis to prove the account takeover. We show that the IP address of the purchase did not match the home of the client. We argue that our client filed the chargeback because they were a victim of identity theft, not because they were committing friendly fraud. We turn the tables and show that the prosecution has targeted the wrong person.
5. Why Clients Choose SJKP LLP for Chargeback Fraud
We combine the technical expertise of a payment processor with the litigation power of a federal defense firm to resolve disputes that exist at the intersection of technology and law.
At SJKP LLP, we do not view chargeback fraud as a cost of doing business. We view it as a legal wrong that demands a remedy.
Our firm is chosen because we understand the codes. We know what Reason Code 4837 means and how to defeat it. We know how to trace a digital purchase to a physical door. We have the resources to file civil suits against fraudsters and the skill to defend against federal indictments.
We act with precision. We automate the evidence gathering but we customize the legal argument. We negotiate from a position of strength because we understand the banking regulations better than the opposition. Whether you are a merchant fighting for your revenue or a consumer fighting for your freedom, SJKP LLP provides the sophisticated and unwavering advocacy necessary to secure your financial and legal future.
09 Jan, 2026
