What do you think about 'friendly fraud?'

What do you think about so-called "friendly fraud?" Is it really friendly? Is it a victimless crime? Is it morally justified by "screwing the big boys" and "just the cost of doing business?"

I know a person who is a friendly fraudster. They will do the following things, often multiple times:
(1) Buy a product with a "satisfaction guarantee," use all the product, and then return it for a full refund saying they weren't satisfied.
(2) Buy a product or service, and dispute the charge with the credit card company and get the charge reversed.
(3) Various other minor scams like getting magazines that say "bill me later," and never paying the bill; returning things to the store with false, fabricated or puffed-up claims of defectiveness.

They do claim to have a moral code, but this behavior is justified because they are operating "well withing the terms of the customer agreement and the law."

What is your opinion on that? Needless to say, it's not something I feel comfortable doing. I wonder if I am overreacting and this isn't such a big deal. On the other hand, I worry that this could be a slippery slope for this person.

My opinion is that it is fraud, and it drives the price of goods and services up. It's people gaming a system that depends on users acting squarely, by not acting square. It's the digital equivalent of shoplifting, and I'd wager that they'd shoplift if they thought they could get away with it.

Quote: teddys

(1) Buy a product with a "satisfaction guarantee," use all the product, and then return it for a full refund saying they weren't satisfied.

Call it legal fraud. It's immoral, but not illegal if he complies with the terms set by the seller.

Business can be funny that way. I can't vouch for this, but I've heard that Nordstrom takes back any and all merchandise no questions asked. It's not unknown for customers to buy an expensive dress, wear it for an event and return it. But if the store sticks with that policy, then obviously they're getting something from it.

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(2) Buy a product or service, and dispute the charge with the credit card company and get the charge reversed.

Outright fraud. I should think it could be prosecuted.

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(3) Various other minor scams like getting magazines that say "bill me later," and never paying the bill; returning things to the store with false, fabricated or puffed-up claims of defectiveness.

I've signed up for magazines that offer a "first issue free" and don't require you pay if you decide not to subscribe after getting that issue. I think that was fair, even if I never intended to subscribe; after all I might have changed my mind. but I do it for only one issue. I don't keep getting the next issue sent to a different address, or under a different name.

Quote: teddys

What do you think about so-called "friendly fraud?" Is it really friendly? Is it a victimless crime? Is it morally justified by "screwing the big boys" and "just the cost of doing business?"

No "fraud" is a victimless crime. I never understood the "wear an outfit then return it" mentality. I think that is a "chick thing." Some guys do it. An employee of mine managed a Florsheim before he worked for me. Said two black guys tried to return a pair of shoes. They were not in resalable condition, bottoms all scuffed up from wearing on cement.

The guy's rationale? He said, "look, I want my money back, I don't need them anymore!" As if the store were a library of some kind. I think he said he had to call security to eject them, and they did not get a refund.

It doesn't bother me in the least to occasionally
take advantage of a billion dollar company like
Walmart or Target. For instance, over years if
I have a dead battery in the parking lot of one
of these huge stores, I'll buy a battery to drive
home, charge the old one, and take the new
one back for a refund. No harm done and it
was much faster than road service.

Quote: teddys

What do you think about so-called "friendly fraud?" Is it really friendly? Is it a victimless crime? Is it morally justified by "screwing the big boys" and "just the cost of doing business?"

I know a person who is a friendly fraudster. They will do the following things, often multiple times:
(1) Buy a product with a "satisfaction guarantee," use all the product, and then return it for a full refund saying they weren't satisfied.
(2) Buy a product or service, and dispute the charge with the credit card company and get the charge reversed.
(3) Various other minor scams like getting magazines that say "bill me later," and never paying the bill; returning things to the store with false, fabricated or puffed-up claims of defectiveness.

They do claim to have a moral code, but this behavior is justified because they are operating "well withing the terms of the customer agreement and the law."

What is your opinion on that? Needless to say, it's not something I feel comfortable doing. I wonder if I am overreacting and this isn't such a big deal. On the other hand, I worry that this could be a slippery slope for this person.

I agree with Nareed's comments in general. I work in the retail industry and I will say that fraud is fraud, I don't care if it's "friendly" or intentionally malicious.

On the other hand, markups on those items are usually ridiculously high, so most stores can afford to take a small hit against people like that. However, too much of this causes stores to change policies, and that's not good for the greater cause. Therefore it's not a victimless crime at all.

Quote: Nareed

Business can be funny that way. I can't vouch for this, but I've heard that Nordstrom takes back any and all merchandise no questions asked. It's not unknown for customers to buy an expensive dress, wear it for an event and return it. But if the store sticks with that policy, then obviously they're getting something from it.

They're getting customers who are willing to pay more (and not even always) for, almost hands-down, the best customer service in the industry. My father-in-law bought a pair of Ecco shoes from Nordstrom, then over the past 18 months lost 100lbs. Turns out, losing weight usually makes your feet shrink because your arches are no longer stretched out from the weight. So the shoes didn't fit anymore. He took them back and Nordstrom exchanged them over a year later. He doesn't even bother shopping for shoes, or basically anything else, anywhere else now.

That seems like a sound business policy to me: don't sweat an individual transaction if you're increasing a customer's loyalty and lifetime theo. Casino operators should take note.

Quote: MathExtremist

That seems like a sound business policy to me: don't sweat an individual transaction if you're increasing a customer's loyalty and lifetime theo. Casino operators should take note.

Nordtrom Department Store and Casino... It has a ring to it, and there's already one in Vegas.

Of course, it would be all high-limit rooms :)

Quote: teddys

What do you think about so-called "friendly fraud?" Is it really friendly? Is it a victimless crime? Is it morally justified by "screwing the big boys" and "just the cost of doing business?"

I know a person who is a friendly fraudster. They will do the following things, often multiple times:
(1) Buy a product with a "satisfaction guarantee," use all the product, and then return it for a full refund saying they weren't satisfied.
(2) Buy a product or service, and dispute the charge with the credit card company and get the charge reversed.
(3) Various other minor scams like getting magazines that say "bill me later," and never paying the bill; returning things to the store with false, fabricated or puffed-up claims of defectiveness.

They do claim to have a moral code, but this behavior is justified because they are operating "well withing the terms of the customer agreement and the law."

What is your opinion on that? Needless to say, it's not something I feel comfortable doing. I wonder if I am overreacting and this isn't such a big deal. On the other hand, I worry that this could be a slippery slope for this person.

Wow! What a jerk. Bet he counts cards, too.

Quote: teddys

What is your opinion on that? Needless to say, it's not something I feel comfortable doing. I wonder if I am overreacting and this isn't such a big deal. On the other hand, I worry that this could be a slippery slope for this person.

It is a big deal. Your acuqaintance is acting like a leech or a moocher. That's unseemly, abusive and uncivilized behavior.

He might stay a petty chiseler forever, or he may escalate. There's no way to tell, really. But chances are good he'll wind up in jail a time or two.