How Economic Pressure is Fueling Chargeback Abuse Across the UK
This article is provided by BRC Associate Member, Chargebacks911.
__________________________
Soaring inflation, supply chain disruption and falling consumer confidence are prompting more UK shoppers to weaponise the chargeback process.
By Monica Eaton, CEO of Chargebacks911
Chargebacks were never meant to be a consumer budgeting tool. Yet that’s exactly how many cardholders in the UK are beginning to treat them.
As inflation persists, trade tensions escalate, and confidence in the economy falters, we’re seeing a troubling trend: more consumers are using chargebacks not as a last resort to resolve legitimate disputes, but as a way to claw back funds from genuine purchases. This is known as first-party misuse—or more colloquially, “friendly fraud.”
It might sound harmless. But make no mistake: this behaviour is anything but friendly.
Economic Conditions Are Fueling the Fire
It’s no secret that the UK economy has been under strain. Although the country narrowly avoided a recession in early 2025, conditions remain fragile. GDP stagnated in Q1. Inflation rose to 3.5% in April, up from 2.6% the month before, and household debt hit a record high of £1.8 trillion, according to the Bank of England.
Meanwhile, the GfK Consumer Confidence Index dropped to its lowest point in over a year, reflecting growing anxiety among consumers navigating the ongoing cost-of-living crisis and global market volatility.
As household budgets tighten, we’re seeing more shoppers treat chargebacks as a kind of financial safety net—requesting reversals not because goods were defective or never arrived, but because they can’t justify the spend post-purchase.
While it may be rationalised as a one-off solution to short-term financial strain, the impact on businesses is long-term and deeply damaging. These disputes create unnecessary operational costs, siphon off legitimate revenue, and risk reputational harm with issuers and payment providers.
When Financial Pressure Meets Loophole Behaviour
What we’re witnessing is a convergence of economic anxiety and digital convenience. Cardholders can file a chargeback with just a few taps, often without fully understanding the long-term impact of their actions. Whether intentional or not, it’s retailers who absorb the cost—both in lost revenue and damaged reputations.
Many consumers think: “I didn’t get my delivery on time, I’ll just dispute the charge.” Or worse: “I need the money more than the merchant does.” In either case, this normalisation of chargeback abuse shifts the financial burden onto businesses who are already operating on thinner margins due to rising input and labour costs.
According to LexisNexis’ 2024 Cybercrime Report, friendly fraud now accounts for 36% of global fraud cases, more than doubling from 15% the previous year. The UK is no exception. If economic pressures persist or deepen, that number could climb even higher.
Why This Matters to UK Merchants
Chargebacks were designed to protect consumers from fraud or undelivered goods. But when misused, they become a blunt instrument that punishes legitimate businesses for systemic issues beyond their control—such as shipping delays, policy confusion, or even buyer’s remorse.
This is especially dangerous in high-risk verticals like electronics, fashion, and food delivery—industries that are already navigating supply chain disruption and price volatility due to ongoing Brexit-related trade complexities and retaliatory tariffs from global partners.
What Merchants Can Do Right Now
Retailers can’t afford to be passive. A proactive, data-led approach is essential to keeping chargeback abuse at bay. Here’s where to start:
- Monitor for Patterns
Audit chargeback records regularly to identify recurring reason codes—especially “item not received” or “unauthorised transaction.” These are common indicators of friendly fraud. Watch for spikes in specific SKUs, channels, or geographies. - Improve Customer Communication
Many chargebacks happen because customers feel ignored or confused. Make return, refund, and cancellation policies crystal clear. Send timely updates, confirmations, and tracking info. Keep proof of delivery, correspondence, and customer consent handy. - Train Your Teams
Your frontline staff play a key role in dispute prevention. Train them to spot red flags early—such as vague complaints or aggressive refund demands—and escalate potential abuse cases before they reach the bank. - Use Technology Wisely
Invest in real-time alert systems to catch disputes before they escalate. Use AI to automate and strengthen your representment cases with supporting documentation like receipts, logs, and IP addresses. - Don’t Dismiss Small Disputes
Every chargeback—even for low-ticket items—offers insight. Repeat offenders and high-value product categories should be prioritised. The goal is not just to recover lost revenue, but to discourage future abuse.
Chargebacks as a Strategic Threat
This isn’t the first time we’ve seen economic pressure trigger a spike in chargebacks. It happened during the pandemic in 2020, again during inflation surges in 2022, and now once more in 2025.
Retailers must evolve their mindset: chargebacks aren’t just an operational nuisance—they’re a strategic threat. That means prevention isn’t a back-office function; it’s a front-line defence.
Fortunately, this is a threat that can be managed. With the right tools, systems, and awareness in place, merchants can reduce exposure, recover revenue, and protect their customer relationships.
Final Thoughts
We must stop viewing chargebacks as a necessary evil or just another line on a P&L report. They’re a warning signal—an indicator of broader economic stress and changing consumer dynamics.
Handled strategically, they become a lever for protecting revenue, improving customer experience, and reducing long-term risk.
At Chargebacks911, we’re helping UK merchants turn that threat into an opportunity for resilience.
