OMAHA, Neb.—Here is news for which credit unions will not be giving thanks this weekend.
According to a new report, so-called “friendly fraud” is expected to increase by 25% between Thanksgiving and Cyber Monday, according to an analysis of billions of transactions of global eCommerce businesses by ACI Worldwide.
As the company explained, “friendly fraud” or “return fraud” occurs when legitimate customers dispute transactions post-purchase.
“Often mistaken for true fraud, these disputes are a growing industry challenge and cost retailers $103 billion in 2024 alone, according to a recent industry report,” the company said.
The average transaction value for a ‘friendly fraud’ item during this year’s holiday season is expected to reach $291, $52 higher than during the same period last year, representing a 21% YoY increase, ACI reported.
‘Staggering’ Numbers
“These numbers are staggering and show just how bold consumers have become,” Erika Dietrich, VP-analytics & optimization payments intelligence, said in a statement. “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.”
ACI said many merchants continue to rely on traditional methods to tackle friendly fraud, but “these often fall short in today’s fast-moving digital landscape.”
The company said its AI-powered Payments Intelligence helps merchants prevent fraud in real time while achieving an industry-leading approval rate of 98% during the holiday season.”
By the Numbers
According to ACI, the numbers for the period from Black Friday through Cyber Monday include:
- 27% transactional volume increase YOY
- Average transaction value $131 – $3 decrease YoY
- 98% fraud decision approval rate – exceeding the average market rate of 95%
- 30% increase in mobile device shopping
- Chargebacks: 0.04% by number of transactions; $148 average transaction value – $54 decrease as actors are shifting to ‘friendly fraud’ methods
