We’re returning to a topic we explored in a long read earlier this year now – refund fraud.
Around 6.5 million people paid for goods or services before telling their bank the money was taken illegitimately, an emerchantpay survey of 2,000 people suggests.
Sometimes called “friendly fraud”, the crime takes advantage of banks’ chargeback function, paying out £441 on average.
“Friendly fraud is not a victimless crime – banks and businesses are increasingly feeling the impact as cases continue to rise,” says Alexander Berrai, deputy chief executive at emerchantpay.
“It remains a complex issue to manage, with genuine mistakes often difficult to distinguish from deliberately fraudulent claims.”
Only 18% of those who made an illegitimate chargeback claim were denied compensation, emerchantpay said.
Chargeback is supposed to be a layer of protection for consumers, allowing them to apply to reverse a card transaction if fraud occurs or if a seller does not rectify undelivered or faulty goods.
In total, the fraud is said to have totalled £3.5bn in the past year.
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