Merchants Report 28% Rise in Friendly Fraud Over Last 3 Years

Merchants Report 28% Rise in Friendly Fraud Over Last 3 Years

July 21, 2022

On average, e-commerce merchants experience a chargeback rate of just under 0.5 percent, according to the results of a new study from Chargebacks911 and Card Not Present.

The 2022 Chargeback Field Report is a comprehensive examination of the state of chargeback management for digital merchants. The average chargeback ratio found among respondents of the survey, expressed as the percentage of total transactions that result in a chargeback, varies with both the size of the business and the overall number of chargebacks they receive. The report found the average ratio dropped for smaller merchants and for those who report fewer chargebacks overall.

Naturally, merchants reported that winning chargeback cases was their biggest chargeback-related challenge, but the problem cited by the second-most online sellers is identifying friendly fraud. Nearly two-thirds of merchants reported an increase in friendly fraud. This is down from last year’s report—not surprising since chargebacks during the pandemic reached an all-time high.

The report also delves into chargeback win rates and why some merchants might be overestimating how much they win. Merchants polled in the report re-present an average of 54 percent of friendly fraud chargebacks. But many don’t follow through and track chargebacks they may have won, but were challenged a second time by the customer.

“Survey respondents with the calculated net win rate of 10.2 percent were asked the percentage of claims initially decided in their favor that were later charged back a second time by the bank,” the report’s authors wrote. “On average, participants said this equaled 13 percent of their re-presentment wins.”

Download a copy of the entire report here.

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