A small BBQ retailer in Ontario is feeling burned after having to refund a customer who purchased a brand new barbeque, but stated they never received it.
Chuck Shabsove, president of Capital BBQ, told CTV News that his company had organized delivery for the new barbeque to a client who requested it be dropped off by the back gate. After the delivery, the customer claimed they never received the barbeque, despite there being a valid receipt, proof of delivery and a registered warranty showing the client’s personal information.
Ultimately, the customer went through their credit card company and requested to reverse the transaction. They were successful, and now Shabsove is out both the barbeque and $3,000. “He registered the grill and so we have definite proof that he got the product, the serial number matches the invoice, but he denies that he got it, and the credit card company sided with him,” Shabsove told CTV.
Shabsove’s experience isn’t a one-time event either. It’s a type of theft, called ‘friendly fraud,’ growing across Canada that, despite the name, isn’t amicable in the slightest.
What is ‘friendly fraud’?
Friendly fraud occurs when a legitimate customer requests a chargeback from their credit card company despite receiving the merchandise they ordered. The credit card sides with the client, and they reverse the charge, leaving the business on the hook.
Not all cases are malicious. Some may arise from a customer seeing a charge they forgot about and requesting a chargeback, for example. This can be common with subscription fees or free trials ending.
Regardless, what makes friendly fraud “friendly” is that it involves a true customer — a first party rather than a third party. But that doesn’t mean its effects are less common.
Mastercard’s 2025 State of Chargeback’s Report found that almost half (45%) of merchants’ chargebacks were highlighted as fraudulent, either from third-party fraud or first-party fraud. With the volume of chargebacks expected to rise by 24% by 2028, according to the credit card company, that means more businesses will face scenarios like Capital BBQ’s.
What exactly happens when a business faces a credit card chargeback?
What happens to merchants when false claims are made?
Unfortunately for small businesses facing a controversial chargeback claim, the dispute process is time-consuming. Payment processor Clearly Payments estimates that businesses may spend two to five hours to dispute a faulty chargeback. And the process can take anywhere from one to six months.
For smaller businesses run by a family, that kind of time can cut into profits and pull them away from more revenue-focused activities. Chargebacks also cost the business fees issued by the credit card company. Mastercard’s research found that the average cost of a chargeback is approximately USD$84 for retail companies. A small business like Shabsove’s had to foot an additional CDN$100 on top of losing a brand new barbeque.
To top it off, Clearly Payment’s data suggest that merchants who dispute chargebacks are only successful around 20% to 30% of the time, despite putting in hours of work.
What businesses can do to prevent friendly fraud
Since disputing chargebacks can be a zero-sum game, businesses may have a better rate of return by creating safeguards to prevent friendly fraud in the first place. Here are some tips from the Canadian Federation of Independent Business you can implement:
- Train staff to recognize fraud signs: Show your staff common fraud red flags such as unusually large orders, purchasing an item commonly stolen or how to tell if a client has a history of improper chargebacks. Staff that detect warning signs can catch fraud before it occurs.
- Require ID on item pick-up or drop-off: Mandating customers to show their ID when picking up or receiving an item can give you two meaningul forms of proof, that they received the item and that the person who ordered it is the person who received it. This rules out any unintentional friendly fraud by family members of the cardholder.
- Adopt an in-person payment policy: If your business is susceptible to friendly fraud, implementing an in-person payment policy can reduce the potential for someone to mistakenly dispute a charge on their card later on. Additionally, if they do decide to dispute the transaction with their card card company, you have clear proof they intended to purchase the item.
Businesses can fight back
Friendly fraud can seem innocuous for smaller transactions that seem honest, but it can quickly snowball into thousands of dollars in missing merchandise and processing fees if businesses aren’t careful. Follow the above recommendations from experts to keep your business from falling victim. But if it does, take detailed records of everything from client ID to proof of delivery, you’ll need it to dispute the chargeback transaction.
Sources
1. CTV News: Ottawa BBQ business out thousands after customer wins disputed credit card refund, by Katelyn Wilson (June 25, 2025)
2. Mastercard: What’s the true cost of a chargeback in 2025?
3. Clearly Payments: Chargeback Dispute Statistics for Merchants
4. CFIB: Credit Card Fraud: protect your business!
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
