This trend is creating significant challenges for businesses across industries, particularly as global ecommerce revenues are projected to grow by 14% to USD 4 trillion in 2024. The report reveals that dispute rates increased by 78% year-over-year in Q3 2024.
Chargeback values saw a sharp rise during Q1 2024—commonly referred to as ‘chargeback season’ following the December holidays—reaching an average of USD 374, a 59% increase from the prior year.
The hardest-hit sectors include online travel and lodging, which reported an 816% increase in chargebacks, e-commerce with a 222% rise, and digital goods and services, which experienced a 59% uptick.
Economic pressures are contributing to a rise in ‘friendly’ fraud, where consumers initiate chargebacks to recover money despite being satisfied with their purchase. Sift’s research shows that 27% of consumers have encountered online content promoting such practices.
The data also highlights a generational divide in chargeback fraud participation. Among Gen Z respondents, 42% admitted to engaging in chargeback fraud, compared to 33% of Millennials, 21% of Generation X, and only 6% of Baby Boomers.
How are businesses affected?
Businesses are facing increased financial and operational burdens due to the normalization of such practices. Sift’s report emphasizes the need for advanced fraud prevention technologies, such as AI-powered systems, to combat both chargeback abuse and traditional fraud effectively.
Sift’s findings underscore the growing importance of protecting digital transactions and maintaining trust in an increasingly complex e-commerce landscape.
