How cowboy boot brand Tecovas is battling ‘friendly fraud’

“The sheer volume and success of the company kind of puts a spotlight on you [for fraud],” Draper said. Tecovas declined to provide a current fraud rate for its business.

Tecovas’s largest challenge relates to chargebacks, a process in which a cardholder disputes a transaction and asks their bank or credit card company to reverse the payment. The brand isn’t alone in dealing with this. Chargebacks have become more common since Covid fueled a rapid rise in online shopping and led people to buy fewer products in person. Riskified’s 2024 Chargeback Challenges Report, which surveyed 300 e-commerce chargeback managers worldwide, found that 76% of respondents saw as many or more chargebacks year over year.

Tecovas, like other companies, only has a certain amount of time to dispute a fraud charge after it is filed. “We want to be focused on growing the business,” Draper said. “We don’t want to be distracted with things that could be prevented or mitigated, to a certain degree.”

To troubleshoot this issue, in January, Tecovas teamed up with Seon, a fraud prevention company, to enhance its security and fraud-detection capabilities. The two officially announced their partnership on Tuesday. Seon uses information from online orders (like phone numbers), devices (like IP addresses) and data breaches (like leaked emails) to evaluate whether a transaction is legitimate. It can both flag a fraudulent charge and collect details brands may need to dispute a chargeback.

Seon’s president, Matt DeLauro, told Modern Retail there are two main types of fraud. One is third-party fraud, like when someone steals someone else’s credit card and makes a purchase with it. Another is first-party fraud, like when someone makes a purchase with their own credit card, receives a product, claims it was never delivered and asks for a refund. The latter, also called “friendly fraud,” is becoming more common when it comes to Tecovas, DeLauro explained.

“These are $500-$1,000 purchases that have high resale value,” DeLauro said. “That incentivizes fraudsters to perpetrate first-party fraud, because they know they can claim a chargeback, pay nothing for the boots and sell them on eBay. … Luxury brands are typically not going to introduce a lot of friction when you try and return something. If you combine that very generous policy of returns with a desirable brand, you get targeted.”

Fashion, in general, poses a “significantly higher risk” of fraud, policy abuses, chargebacks and reseller issues than other retail sectors, Eyal Elazar, senior director of market intelligence at Riskified, told Modern Retail. Footwear, in particular, is 77% more risky than average, he said, as shoes are among the most-purchased luxury fashion items. Fraudsters also typically target emerging brands focused on growth — a bucket Tecovas falls into — because they know the companies are still solidifying their identities and customer bases, Elazar said.

Fraudulent chargebacks account for 45% of chargeback volume globally, according to data from Datos Insights and Mastercard. These can be damaging to a company, both in the short term and long term. In the short term, merchants lose product and revenue, and in the long term, they risk higher card processing fees and being dropped by payment providers.

And yet, the chargeback challenge isn’t going away. In fact, chargebacks are set to become an even bigger headache for brands and retailers, Elazar said. Globally, chargeback volume is set to hit $324.2 million in 2028, up from $241.4 million in 2024, per Datos Insights and Mastercard. In 2025, chargebacks present another obstacle to brands’ profitability on top of dizzying tariffs. “If you’re doing $100 million a year online, you could be losing 0.5-1% of revenue just by refunding chargebacks,” DeLauro said.

Chargebacks can put retailers and brands in a tricky position, Elazar and DeLauro said. Companies need to stop fraud from occurring, but they also need to prevent accidentally turning away loyal customers. If a merchant has a high chargeback rate, they may be more hesitant to approve what is actually a valid transaction from going through, leading to what’s called a “false decline.” These instances can hurt a company’s bottom line. In 2019, The Aite Group estimated that merchants lose up to 75 times more revenue to false declines than they do to legitimate fraud.

Ultimately, for all retail brands, fraud will continue to be a challenge, especially as bad actors look for ways to make money in today’s volatile economic environment. But Tecovas is trying to make sure fraud doesn’t become “a big problem for us,” Draper said. “We’re paying close attention to the data, and we’re getting proactive,” he said.