The value of transactions lost to friendly fraud – also known as first-party fraud – will reach nearly $16bn in 2031; a growth of 96% from its 2026 value of $8.1bn – because online payments cuts the emotional tie with merchants and reduces consumer qualms about asking for money back.
According to Juniper Research, friendly fraud’s growth is driven by an increase in consumers perceiving forms of fraud that target merchants as ‘victimless crimes’. This is taking many forms, including consumers using chargebacks after they have changed their mind about purchasing a service, or an attempt to gain goods for free.
An extract of the new report, Chargeback Management Market 2026-2031, is available as a free download. The report also forms part of our new Merchant Payments subscription, which offers tailored insights and data for the rapidly moving sector.
Misunderstandings magnifying challenges
The report identified that chargebacks are more likely for card not present (CNP) transactions, as eCommerce creates distance between the cardholder and merchant; making them more comfortable raising fraudulent chargebacks.
The report recommends the use of pre-chargeback alerts and pre-emptive refunds to avoid costly fees incurred from fraudulent chargebacks.
Senior Analyst Michael Greenwood adds “Given the costs of chargebacks, winning disputes is not enough – merchants must be proactive, or else they will suffer heavy fees.”
The report also identified misunderstandings as another cause of growing chargeback volume. Goods and services purchased online often appear on bank statements under a different name to the merchant’s branding, leading to a suspicion of fraud. Brands should ensure banking app descriptors match the brand name to minimise confusion.
