According to a research conducted by Global Risk Technologies, after UK consumers spent GBP 13 billion online in the run up to Christmas, retailers are currently in a period of refunds and returns as unwanted Christmas presents and too-hastily purchased sales items are returned, often at a big cost to retail businesses.
As one of the most common types of chargeback fraud, friendly fraud involves a consumer making an online purchase and then contacting their bank, stating that the transaction was not their doing, resulting in a chargeback. The customer gets their money and the retailer gets the hassle of dealing with banks and paying fines, as well as losing a valuable item of stock in many cases.
Findings reveal that in 2014, 98% of US consumers who had filed for chargebacks from January to March did not attempt to resolve their issue with the merchant first, according to a study conducted by eConsumer Services. Visa has reported that an alarming 86% of chargebacks are filed without the merchant participating as a first recourse. About GBP 7.5 billion can be attributed to annual losses to friendly fraud in the UK, higher than losses through identity theft.
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