Retailers are bracing for a significant surge in “friendly fraud” this holiday season, with an expected 25% increase between Thanksgiving and Cyber Monday.
This type of fraud, where legitimate customers dispute transactions after a purchase, is projected to cost businesses a staggering $103 billion in 2024 alone, according to an analysis by global payments technology innovator ACI Worldwide.
“These numbers are staggering and show just how bold consumers have become,” said Erika Dietrich, VP Analytics & Optimisation Payments Intelligence at ACI Worldwide.
“Over the past several years, refund abuse and friendly fraud have surged, driven by frictionless eCommerce and amplified by social media. Platforms spread so-called ‘refund hacks,’ making misuse appear socially acceptable, while merchants bear the operational and financial burden. Instant refunds, free returns, and omnichannel complexity create loopholes that opportunistic consumers exploit, costing businesses millions.”
Many retailers continue to rely on outdated methods to combat friendly fraud, which often prove ineffective in today’s fast-paced digital landscape.
Key figures for the Black Friday through Cyber Monday period also highlight a 27% year-on-year increase in transactional volume, with a 30 % rise in mobile device shopping. While the average transaction value decreased slightly to $131, the shift towards “friendly fraud” methods is evident, with chargebacks accounting for just 0.04% of transactions.
The 2025 forecast from the National Retail Federation on Thursday estimates that shoppers will collectively spend between $1.01 trillion and $1.02 trillion in November and December, an increase of 3.7% to 4.2% compared with last year.
Retailers rung up $976 billion in holiday sales last year, or a 4.3% increase from the prior year, the group said.