FedEx ‘Picture Proof’ Is Latest Salvo vs. Friendly Fraud

For eCommerce, call it a photo finish.

Or: proof positive in the fight against friendly fraud, or more specifically first-party misuse.

FedEx said on Wednesday (June 22) that it is launching its “Picture Proof of Delivery” for express and ground residential deliveries in the U.S. and Canada that are released without a signature.

FedEx said in a press release that recipients will receive photos depicting the location of the package, and customers can access that photo proof by tracking their packages online. The service is available without having to create accounts or login.

The company noted in its announcement that FedEx Express and FedEx Ground now become the first nationwide carriers to provide that photographic evidence of delivery. And, we note, it follows in the footsteps of what Amazon has been doing for years with its own delivery efforts.

Cutting Down on Disputes 

The statement takes note that the service is useful in tracking perishable items, and gives “peace of mind” to merchants and to customers. The term “friendly fraud” is not in the mix.

But of course, that is just what this photographic initiative also is designed to prevent — friendly fraud, or first-party misuse. That type of fraud, as is germane to eCommerce, occurs when a customer claims they did not receive a package … when in fact they did.

That claim tends to kick off the chargeback process, and looks to game the chargeback system. The fraudster keeps the goods, gets the money back, and the merchant loses the sale, and in turn also incurs costs and spends time mired in the dispute process. The retailer loses out, the financial institution loses out, the bad actor makes off with the gains.

As PYMNTS found in a recent collaboration with Verifi, half of the more than 300 merchants surveyed have said that they do not have a reliable way to identify first-party misuse. As many as 23% of the merchants queried said they undercount transactions suspected of being fraudulent. And then, when there is a dispute, half of the sample noted that they have difficulties in tracking disputed transactions.

We found that the sales lost in tandem with these disputes is not insignificant: No matter whether they used in-house or outsourced providers to track and manage disputed card transactions, the top line losses were around 50 basis points for retail trade firms.

Against this backdrop, one additional line of defense against disputed card transactions lies with having proof that an item was delivered, to the right place, when the carrier says it was delivered. The FedEx initiative does just that, and may be a successful tool in cutting down disputes before they can even be initiated.