“It has to be a certain amount to make it even worth it to fight back,” says Korina Sanchez, vice president and general counsel at Third Coast Hospitality Group, which owns Tree House in River North and Moe’s Cantina in Wrigleyville. “We have some pretty big checks sometimes, especially at our club. When people get bottles, they’re in the hundreds and thousands. We’ve had a couple big ones get denied.”
Tree House has recorded 260 chargebacks on checks totaling almost $66,000 since the start of 2020, Sanchez says. She declines to disclose overall revenue, but says chargebacks have nearly tripled since the pandemic hit. “It’s definitely one of our top issues that we deal with.”
Some friendly fraud incidents result from honest mistakes, says Monica Eaton-Cardone, chief operating officer of Chargebacks911. Someone doesn’t recognize a charge on their credit card statement that a spouse made, or maybe a teenager uses a parent’s card to buy pizza without permission. But bad actors are behind many incidents, she says. Additionally, scams tend to rise when the economy slows.
Friendly fraud unfolds in various ways, depending on which banks and credit card processors are involved. Typically, a customer reports a fraudulent charge to a card issuer. The issuer then notifies the restaurant, which has 10 days to contest the claim and provide proof the customer did make the purchase. Usually, the card issuer adjudicates.
Restaurants can take precautions, such as using…
