ACI Flags Sharp Rise in ‘Friendly Fraud’ as Thanksgiving–Cyber Monday Spike Looms
The average transaction value for a ‘friendly fraud’ is expected to reach $291 for the year, $52 higher than during the same period last year, representing a 21% YoY increase.
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Friendly fraud, a phenomenon where a consumer disputes a legitimate transaction with their financial service provider after making a purchase, claiming they never authorised or received it, is expected to rise by 25% between Thanksgiving (November 27th) and Cyber Monday (December 1st), warns ACI Worldwide, a US-based fintech company.
Also known as Return Fraud, these disputes are a growing industry challenge, costing retailers $103 billion in 2024 alone, as per an Apriss Retail report. The average transaction value for a ‘friendly fraud’ is expected to reach $291 for the year, $52 higher than during the same period last year, representing a 21% YoY increase.
“These numbers are staggering and show just how bold consumers have become,” said Erika Dietrich, VP Analytics & Optimization, Payments Intelligence, ACI Worldwide.
According to a 2020 report by FIS Global, friendly fraud accounts for as much as 70% of all credit card fraud.
“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,” added Dietrich.
A Deloitte report highlights that consumers are expected to spend an average of $622 during Black Friday-Cyber Monday (28th Nov-1st Dec), down 4% from last year.
“While we expect shoppers to plan to pull back on spending, we also anticipate strong participation throughout the holiday week, with many planning to blend the convenience of online shopping with the energy of the in-store experience,” said Natalie Martini, vice chair and U.S. Retail and Consumer Products sector leader, Deloitte.
The YoY participation in BFCM is higher than the last edition, as 82% of respondents plan to shop during the week, with 64% planning to use financing options to stretch their season’s budget.
