Chargebacks911, a global firm specializing in dispute resolution and chargeback prevention, is warning UK merchants that inflationary pressures, trade disruption, and weakening consumer confidence “are creating the perfect conditions for a sharp rise in chargeback abuse.”
As household budgets shrink and financial anxiety grows, more consumers are turning to chargebacks—both “intentionally and unintentionally—as a way to reclaim funds from legitimate purchases.”
This growing trend, known as first-party misuse or “friendly fraud,” is costing UK retailers millions in “lost revenue, operational costs, and reputational damage.”
Monica Eaton, CEO of Chargebacks911 said:
“Economic stress often changes consumer behaviour. We’re seeing more cardholders exploit chargebacks not because they didn’t receive the product or service, but because they’re looking for ways to manage financial strain. Unfortunately, it’s the merchant who foots the bill.”
The UK economy narrowly avoided “a recession in early 2025, but conditions remain fragile.”
In Q1 2025, GDP stagnated, inflation remains persistently high “at 3.5% in April, up from 2.6% in March, according to official data, and household debt reached a record high of £1.8 trillion,” according to the Bank of England.
Meanwhile, consumer confidence fell to a “14-month low in April, driven by the cost-of-living crisis and continued volatility in global markets.”
In addition, ongoing trade uncertainty—stemming from Brexit-related barriers and retaliatory tariffs from global partners—has “led to increased supply chain disruption and higher import costs, particularly in food, electronics, and textiles.”
These conditions are reflected in rising fraud rates.
According to LexisNexis’ latest Cybercrime Report, friendly fraud accounted for “36% of all global fraud in 2024, up from just 15% the year before. Experts warn that figure could grow even higher in the UK if economic conditions worsen.”
Chargebacks911 urges UK businesses to “adopt a proactive, data-driven approach to mitigating chargeback fraud.”
The company recommends the following steps:
Monitor for Dispute Trends and Early Warning Signs
- Audit chargeback data to identify recurring codes such as “item not received” or “unauthorised transaction.”
- Monitor for sudden spikes in disputes across specific products or geographies.
- Improve Customer Communication and Documentation
- Make refund, cancellation, and return policies clear at every purchase stage.
- Provide timely confirmations and tracking details for all orders.
- Retain digital evidence of each sale, including delivery logs, IP addresses, and customer interactions.
Train Frontline Teams
- Educate staff on the warning signs of chargeback abuse.
- Encourage early resolution of disputes through customer service rather than letting issues escalate to the bank.
Use Technology to Stay Ahead
- Deploy real-time chargeback alert systems to intercept disputes before they’re finalised.
- Automate representments using AI tools that compile the strongest possible evidence to reclaim revenue.
- Don’t Absorb Chargebacks Without Investigation
Every chargeback is a potential red flag—track and “learn from each case.
Prioritise disputes tied to high-value goods or repeat offenders to deter future abuse.”
Eaton added:
“We’ve seen this pattern emerge before—COVID in 2020, inflation in 2022, and now the uncertainty of 2025. Retailers who act now will be better equipped to withstand both economic and fraud-related shocks.”
While some forecasters, including the Bank of England, “predict a modest economic rebound later this year, the reality on the ground for many UK merchants is continued volatility and risk.”
With chargebacks becoming increasingly weaponised by financially stressed consumers, Eaton says retailers need “to treat them not as an operational nuisance—but as a strategic threat.”
Eaton concluded:
“Chargebacks are no longer just a cost of doing business—they’re a symptom of deeper financial pressure and evolving fraud. But they’re also a threat you can manage—if you have the right systems, tools, and mindset in place.”
