NEW YORK—Credit card “friendly fraud” is on the rise, a new study shows.
Consumers are cheating businesses out of payments at increasing rates by fraudulently disputing credit card charges that they genuinely made, Axios reported.
Incidents of friendly fraud are up anywhere from 20% to 30% in 2022 depending on the market, Visa told Axios.
Friendly fraud includes an array of situations in which a customer improperly disputes a charge on their credit card bill, including when they forgot about a purchase or don't recognize the name of the merchant on their bill; don't realize that a friend or family member used their card to buy something; or intentionally spend money with the intent of disputing the charge after the fact, Axios explained.
“It's not entirely clear why credit card disputes are rising, particularly because they had been falling for a few years after the rollout of chip cards,” the report continued. “But the pandemic appears to have been a catalyst, as restaurant chargebacks have grown from 1 in 400 transactions to 1 in 100 since it began, according to financial consulting firm Chargebacks911.”
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