More than 36 percent of consumers admitted to falsely claiming a transaction was unauthorized or fraudulent while 31 percent falsely claimed a product never arrived, arrived damaged or was unsatisfactory, according to a recent study. While there is overlap of consumers who have made each of these false claims, this represents a meaningful share of consumers who knowing and willingly committed friendly fraud.
It isn’t just friendly fraud merchants have to worry about, but also loyalty program and promotional abuse. Nearly one-third of consumers admitted to intentionally breaking rules related to promotions and discounts. These consumer promotional abuse and friendly fraud findings were reported in a survey from fraud vendor Signifyd.
Consumer behavior has drastically changed in response to the COVID-19 pandemic, and while friendly fraud has always been a problem, the “new normal” that began in 2020 has exacerbated this issue. Avoiding crowds means doing more online shopping, especially for essentials like groceries. Meanwhile consumers are under great financial pressure making friendly fraud and promotional abuse more likely to occur.
As more consumers turn to shopping online, the percentage of friendly fraud also has shifted higher. The more than 36 percent of respondents who admitted to friendly fraud as of last September is sharply up from the just 8 percent who claimed their order never arrived back in January.
As this new consumer behavior normalizes in society with a new normal, retail leaders and merchants must take appropriate steps to become more vigilant of chargebacks that are not legitimate.
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