“There is no such thing as a free lunch.”
Some would argue that these words still ring true today. But for consumers, getting that ‘free’ lunch has never been easier.
It’s a simple process. With a few taps, customers can dispute a transaction, claim it was unauthorised and receive their money back, often without needing to prove anything at all. The product stays in their hands. The cost lands with merchants.
Many would argue this isn’t theft; it’s simply beating the system.
“Friendly fraud” is the industry’s name for this behaviour. In reality, it represents something far less benign: a growing disconnect between consumer convenience and accountability, where the protections designed to prevent crime are increasingly being used to enable it.
With one in five British consumers admitting to it, why isn’t the industry reacting with more urgency?
Factors influencing the rise?
Friendly fraud is driven by a combination of system design and human behaviour, reinforced by how consumers perceive and use refund systems today.
Modern payment infrastructure has made disputing transactions fast and frictionless. It often requires little to no evidence from the customer, which lowers the perceived risk of making a claim.
This ease is reflected in behaviour: our research found 22.3% of UK consumers admit to knowingly requesting a refund for a legitimate transaction. Approximately the same number say they have done so accidentally. This highlights how blurred the line between mistake and misuse has become.
At the same time, strong consumer protection policies shift liability onto merchants, creating an environment where misuse carries few immediate consequences for the customer. Confusion also plays a role. Subscription models, unclear billing descriptors and difficult cancellation processes frequently lead to disputes. Yet even when customers realise their claim was unjustified, over a third (35.71%) still keep the refunded money.
A broader mindset shift compounds the issue. Many consumers do not view this behaviour as wrong, and over 60% of those who knowingly initiated such refunds report positive feelings about the outcome. Together, these factors create a system where friendly fraud is not only easy to commit, but normalised.
And for vendors, that’s a serious worry.
A fraudless future
Fixing friendly fraud isn’t about removing consumer protections, but about restoring balance.
Part of the problem starts with the name. If this is truly “fraud,” where are the fraudsters? Card networks and issuers have the data, but little incentive to investigate when the cost falls on merchants. Instead, disputes are routinely resolved with refunds, not verification.
At the same time, financial fraud has evolved into something far more serious, organised and criminal. Card disputes rarely meet that threshold, yet they are treated the same, with little investigation and even less accountability. This gap is exactly where “friendly fraud” thrives.
The system isn’t working right now. It can be rebalanced with relatively simple changes. Start by calling these cases what they are: cardholder disputes, not fraud.
Give merchants the opportunity to resolve issues directly with customers before penalties are applied. Introduce basic evidence requirements, like proof of fraud, to deter misuse without affecting legitimate claims. And ensure that merchants, acting in good faith, aren’t unfairly penalised through inflated fraud ratios or reputational damage.
At the same time, clearer processes for consumers, such as easier subscription management and better transaction visibility, would reduce confusion at the source.
Accountability must be shared. Until it is, the system will continue to reward misuse and penalise the wrong side.
Ending friendly fraud for good
Friendly fraud is often framed as a technical or financial issue. But at its core, it is a breakdown of trust. What begins as convenience, fast refunds and minimal friction can quickly become an easily exploitable system.
What began as a marginal problem has evolved into normalised behaviour, shaped by incentives and a lack of accountability. Consumers may benefit in the short term. But the long-term impact, such as higher costs and a more restrictive marketplace, is shared.
The solution is not to remove protections, but a rebalancing of them. A fair system must combine ease with responsibility and trust with accountability. Because once trust becomes a loophole, the system doesn’t just weaken. It starts to work against itself.