Businesses across the UK are facing a growing problem known as “friendly fraud” or chargeback scams, where customers falsely dispute credit card purchases and receive refunds, leaving the sellers to bear the costs. This fraudulent practice is having a significant impact on companies, particularly smaller firms.
One business owner in London, Rusty Nart, who owns Green Monkey London cafe and Fingers Kebab shop, has experienced a noticeable increase in these scams at both of his establishments. Nart explains that customers will make a purchase and then, within a three-month period, initiate a chargeback, denying they made the original purchase. Not only does the business have to refund the money, but they also incur a £28 plus VAT chargeback fee from the card provider.
“You’ve provided that customer with the product or the service, so you lose out on all ends,” Nart said. In an effort to investigate the fraudulent claims, Nart has started keeping every paper receipt, going as far as visiting customers’ homes to ask them why they disputed the charges.
According to financial technology firm Worldpay, all types of credit card fraud, including friendly fraud, cost UK businesses £551.3 million in 2023. The problem is not limited to the UK, as the Lexis Nexis Risk Solutions Cybercrime Report in 2025 found that so-called “friendly fraud” or “first-party fraud” increased from 15% in 2023 to 36% in 2024 globally, making it the “number one” reported fraud category.
Analysts predict the issue will continue to grow into 2026, attributing it to increasingly challenging economic environments that provide “temptation” for consumers to act fraudulently. “As economic pressures build, so does the incidence of first-party fraud,” the report notes.
In response, companies across the finance industry are developing solutions to help businesses combat the problem of friendly fraud. Ariel Chen, CEO of Chargeflow, explains how he became involved in fighting fraud after his own business experienced significant chargeback issues.
While chargeback protection is an important consumer safeguard, UK Finance advises businesses to take proactive measures to prevent and defend against these scams. Recommendations include keeping meticulous records, using courier services with proof of delivery, investing in fraud prevention tools, and prioritising good customer service to encourage legitimate refunds or exchanges.
As the problem of chargeback scams continues to grow, businesses and industry bodies are working to find a balance between protecting genuine consumers and merchants, ensuring that disputes are handled fairly and consistently.