Friendly fraud has emerged as one of the fastest-growing challenges facing merchants, contributing to a sharp increase in chargebacks and disputed transactions across the payments ecosystem. Research from Mercator Advisory Group identifies several factors driving this trend, including stronger consumer protections, the anonymity of e-commerce transactions, simplified dispute processes through mobile banking apps, and the continued growth of online payment volumes. As chargebacks become more common, merchants are increasingly focused on balancing customer service, fraud prevention, and dispute management to reduce losses while preserving positive customer relationships.
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Data for today’s episode is provided by Mercator Advisory Group’s report – Merchant Chargebacks Are on the Rise Due to Friendly Fraud.”
6 factors influence the recent surge in friendly fraud:
- Credit card consumer protection regulations
- Anonymity: online shopping and delivery are anonymous
- Ease of registering a transaction dispute
- Merchants that give consumers the benefit of doubt to display superior customer service
- Growth in overall U.S. transactions: +47% over last 4 years
- Mobile banking apps connect consumers directly with issuer for easier disputes
About this report
Merchants find themselves wrestling with the chargeback process, which is triggered when consumers dispute a purchase transaction, mostly on e-commerce sales. Increasingly, friendly fraud has also become a direct cause of merchant chargebacks. This report delves into chargeback reasons and implications as well as vendors of chargeback services that have emerged to provide solutions for merchants.
A new research report from Mercator Advisory Group, Merchant Chargebacks Are on the Rise Due to Friendly Fraud assesses the challenges and preventive solutions for this increasing problem that affects merchants of all sizes across vertical markets.
“Merchants are incurring a major pain point dealing with consumer-disputed sales transactions that can lead to chargebacks. This can mean merchants lose not only the sales revenue but also the merchandise and related overhead costs as well,” commented Raymond Pucci, Director, Merchant Services at Mercator Advisory Group, the author of this report.
This report is 14 pages long and has 2 exhibits.
Companies mentioned in this report: ACI Worldwide, American Express, Authorize.Net, BlueSnap, Braintree, CardinalCommerce, Chargeback, Chargebacks911, Chargeback Gurus, Chargehound, CyberSource, Discover, Ethoca, Federal Reserve Board, Lexis-Nexis, Mastercard, Midigator, PayPal, Stripe, Verifi, and Visa.
