American consumers filed 158 million transaction disputes in 2025 — a 29% increase from 2021, far outpacing growth in card transactions overall. Some of those disputes were legitimate: unauthorized charges, genuine fraud, goods that never arrived. A significant and growing portion were not.
The behavior has a name: friendly fraud. Also called chargeback fraud or first-party fraud, it describes what happens when a customer files a dispute on a legitimate purchase — one they actually received and authorized — in order to get their money back while keeping the item. It's technically a federal crime. Most people who do it don't think of it that way.
What Friendly Fraud Is — and Why It Doesn't Feel Like Fraud
The mechanics are simple. A customer buys something online, receives it, and then files a dispute with their credit card company claiming the purchase was unauthorized or the item never arrived. The credit card company reverses the charge — called a chargeback — crediting the customer's account while the merchant eats the loss.
Credit card zero-liability policies make this easy to execute. Companies like Mastercard will generally issue a chargeback if a purchase is disputed unless they can confirm the transaction was legitimate. The burden of proof falls on the merchant, who must provide documentation showing the customer made and received the purchase — a process that takes time and money to contest.
"There's people that feel like, oh, this is just sticking it to the man, so to speak," said Jim Mortensen, a strategic adviser in fraud at Datos Insights, speaking to Bloomberg. The perception — that disputing a charge from a large retailer or platform is a victimless act against a faceless corporation — is widespread and largely inaccurate.
The TikTok Tutorial Problem
What has accelerated the trend is the same force accelerating most consumer behaviors in 2026: social media content that normalizes and instructs. TikTok now hosts tutorials coaching shoppers on how to use chargebacks to receive merchandise for free — framed as consumer empowerment, resistance to overpriced goods, or simply a life hack. The videos have millions of views.
The 2026 Chargeback Field Report from Chargebacks911, based on survey data from more than 250 enterprise merchants, found that 83% reported an increase in friendly fraud over the past three years. Nearly three-quarters describe it as a "moderate or significant concern." First-party fraud — the category that includes friendly fraud — has now surpassed traditional scams as the leading form of fraud globally, according to LexisNexis's Cybercrime Report.
Why "Sticking It to the Man" Isn't What Actually Happens
The financial hit from a chargeback rarely costs a merchant only the value of the original transaction. Beyond the reversed charge, the merchant loses the merchandise, pays a chargeback fee to the bank, and bears the cost of investigating and contesting the dispute. Monica Eaton, founder and CEO of Chargebacks911, put the downstream consequence plainly: "Honest customers ultimately absorb part of that burden through higher prices or stricter policies."
The person paying for friendly fraud isn't the platform or the corporate entity. It's other shoppers, through slightly higher prices built into the merchant's cost model. It's also the person doing it, eventually — through tighter return windows, required photo documentation at delivery, surveillance during purchases, and other friction that merchants introduce precisely because abuse has made customer-friendly policies too expensive to maintain.
The Legal Risk Most People Don't Know
Friendly fraud exists in a gray area of perception but not of law. Deliberately disputing a legitimate transaction to obtain goods or services without payment can constitute federal wire fraud, mail fraud, or bank fraud depending on the specifics. While individual consumers are rarely prosecuted — the scale is too massive and the individual amounts too small for prosecutors to prioritize — banks do close accounts of repeat abusers, and merchants maintain internal blacklists.
The credit card protection that friendly fraud exploits was designed for a specific purpose: to shield consumers from unauthorized charges. Using it deliberately to steal merchandise is a misuse of a consumer protection, not a workaround of corporate policy. The distinction matters both legally and practically — and most people filing those 158 million disputes may not have thought carefully about which side of the line they're on.
