NEW YORK– Consumers frustrated by worsening customer service, restrictive return policies and hidden fees are increasingly using credit card chargebacks to recover money from retailers, contributing to a sharp rise in what the payments industry calls “friendly fraud,” and what many in credit unions describe in less-friendly language related to charge-backs.
Indeed, during Velera’s VeleraLIVE meeting earlier this year, chargebacks were the subject of much discussion, with the company announcing solutions it has developed in response.
The publication reported that while chargebacks were originally designed to protect consumers from unauthorized transactions and legitimate merchant disputes, many cardholders are now using them in situations where they simply are dissatisfied with a purchase or have become frustrated with a retailer’s customer service. In some cases, consumers dispute charges without first attempting to resolve the issue directly with the merchant.
Bloomberg Businessweek reported that U.S. consumers filed approximately 158 million payment disputes in 2025, a 29% increase from 2021, outpacing the growth in overall card transactions. Researchers cited by the publication attribute much of the increase to “friendly fraud,” in which legitimate cardholders seek chargebacks on authorized purchases.
The Growing Frustration
According to the report, the trend reflects growing consumer frustration with online shopping experiences, including merchandise that does not meet expectations, increasingly restrictive return policies, recurring subscription charges and difficulty reaching customer service representatives. Some consumers told Bloomberg Businessweek they view chargebacks as the quickest way to resolve disputes when retailers fail to respond or offer only partial refunds.
Industry experts interviewed by Bloomberg Businessweek cautioned that fraudulent chargebacks ultimately increase costs for merchants, particularly small businesses, which can lose both the merchandise and the payment while also incurring processing fees. Rising levels of friendly fraud are also prompting retailers to tighten return policies and invest more heavily in fraud detection technologies, the report said.
The report noted that while many chargebacks involve legitimate consumer complaints, payments experts distinguish those cases from friendly fraud, which generally involves disputes over purchases that were authorized and delivered or instances in which consumers bypass merchants’ dispute-resolution processes.
