British retailers are preparing for a dramatic rise in so-called 'friendly fraud' during the crucial holiday shopping period, with a sharp 25% increase anticipated between Thanksgiving and Cyber Monday.
The Staggering Cost of Customer Disputes
According to an analysis by global payments technology firm ACI Worldwide, this type of fraud—where legitimate customers dispute transactions after making a purchase—is forecast to cost businesses an astonishing $103 billion in 2024. This represents a significant challenge for the retail sector, as these disputes are often mistaken for genuine criminal activity.
The average value of an item involved in a 'friendly fraud' case during this year's holiday season is expected to hit $291, marking a substantial 21% year-on-year increase.
Social Media and Refund Culture Driving the Trend
Erika Dietrich, VP of Analytics & Optimisation Payments Intelligence at ACI Worldwide, commented on the alarming figures. "These numbers are staggering and show just how bold consumers have become," she said. "Over the past several years, refund abuse and friendly fraud have surged, driven by frictionless eCommerce and amplified by social media."
Dietrich explained that online platforms are spreading what are known as 'refund hacks,' making this type of misuse appear socially acceptable. Meanwhile, merchants are left to bear the full operational and financial burden. The combination of instant refunds, free returns, and complex omnichannel systems creates loopholes that opportunistic shoppers are increasingly exploiting.
Transactional Shifts and Outdated Defences
The analysis also revealed key figures for the Black Friday to Cyber Monday period:
- A 27% year-on-year increase in transactional volume
- A 30% rise in shopping via mobile devices
- A slight decrease in the average transaction value to $131
Despite the clear shift towards 'friendly fraud' methods, chargebacks accounted for just 0.04% of transactions. Many retailers continue to depend on outdated fraud prevention techniques that are proving ineffective in today's fast-moving digital marketplace.
In a separate forecast, the National Retail Federation estimates that shoppers will spend between $1.01 trillion and $1.02 trillion during November and December 2025. This represents an increase of 3.7% to 4.2% compared with the previous year, following $976 billion in holiday sales during the previous season.
