What term describes a situation where a legitimate cardholder doesn't recognize a transaction on their statement?

The situation described refers to "Friendly Fraud," where a legitimate cardholder disputes a transaction because they do not recognize it on their statement, often mistakenly believing that it is a fraudulent charge. This typically occurs when a consumer makes a purchase but then forgets about it or does not recognize the merchant name on their card statement. As a result, they file a chargeback with their bank, claiming the transaction was unauthorized, leading to potential financial loss for the merchant.

Friendly fraud is a significant issue for merchants as it can result in lost revenue and additional fees associated with chargebacks. This type of fraud is distinct from other forms, including chargeback fraud, where a consumer knowingly disputes a legitimate transaction for malicious purposes, and identity theft fraud, where someone uses another person's information to make unauthorized purchases. Understanding the nuances of these different types of fraud is crucial for managing risks and implementing effective payment processing strategies.