The news: Friendly fraud incidents have risen between 20% and 30% in 2022 across global markets, Visa’s chief risk officer, Paul Fabara, told Axios.
Key context: Friendly fraud is when consumers report legitimate transactions as fraud. This can occur in a few different scenarios—only some of which are intentional.
It’s often difficult for banks to prove friendly fraud because it's committed by legitimate customers who are making valid transactions, and it’s challenging to decipher malicious intent, according to Seon. Friendly fraud is committed by 17% of consumers who file chargebacks, per Sift.
Why it’s worth watching: Card fraud losses in the US are expected to grow 8.2% year over year (YoY) to hit $12.16 billion in 2022, per Insider Intelligence forecasts.
While it’s difficult to pinpoint what’s driving the increase in friendly fraud, economic headwinds might be a factor. Consumers contending with tighter budgets might opt for friendly fraud to escape financial responsibility for big-ticket purchases.
Why it matters: Fraud can have serious implications for everyone in the purchasing chain. This makes it more important than ever to invest in advanced fraud prevention tools and encourage digital payments with stronger fraud safeguards—like mobile wallets, which often have authentication capabilities.
Related content: Check out our US Card Payment Fraud Losses Forecast 2022 spotlight report to learn about the factors influencing the US fraud landscape.
This article originally appeared in Insider Intelligence's Payments Innovation Briefing—a daily recap of top stories reshaping the payments industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.
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