Fake refunds used to be a niche problem. Now they're everywhere. A 2024 report revealed that friendly fraud now accounts for nearly half of all chargebacks, leading to merchant losses of $117.47 billion in 2023.
Additionally, over the last year, chargeback fraud has exploded across major platforms—especially in gaming, digital subscriptions, and delivery apps. Scammers are abusing refund systems to get their money back after receiving a service or digital good. That "friendly fraud" behavior is costing businesses millions.
The Scam Looks Like a Normal Dispute
Let's say someone buys in-game currency, watches the charge go through, then calls their bank to dispute it. They say it was unauthorized. They keep the coins. The merchant loses both the sale and the product, and then pays a chargeback fee on top.
Banks usually side with the customer. And unless the merchant has airtight proof—like login logs, IP addresses, or receipts—it's hard to fight back.
Now multiply that by thousands of users. That's what platforms like Apple, Meta, and Uber are dealing with behind the scenes.
Platforms Are Starting to Pass the Cost Back
To keep up, companies are investing in chargeback mitigation tools and fraud detection. But those systems cost money, and someone has to pay for them.
That's why you might've noticed price hikes. Or stricter refund policies. Or new identity checks at checkout. In some cases, developers are being charged higher fees to access app stores, especially if they operate in high-risk categories like adult content or crypto.
Those added costs trickle down. A $4.99 app might quietly become $6.49. Subscriptions get bumped up a dollar.
Visa and Stripe Are Cracking Down Too
It's not just app stores that are reacting.
Visa introduced Compelling Evidence 3.0 in 2023, allowing merchants to use a customer's purchase history to dispute fraudulent chargebacks.
Stripe offers Chargeback Protection, covering certain fraudulent disputes for a fee of 0.4% per transaction.
They're trying to stem the tide, but even with better tools, it's a game of cat and mouse.
Chargeback Abuse Can Be Easy to Miss
Most of these refund scams look harmless at first. Some users even feel justified, especially if the product was glitchy or the refund policy wasn't clear. But once enough people catch on, it becomes a feedback loop.
More fraud leads to stricter policies. That frustrates honest customers. Trust erodes.
And in the end, the cost lands where it always does: with the rest of us.
Stop Chargebacks Before They Start
Chargeback abuse isn't going away—but you don't have to just deal with it. At Chargeblast, we help platforms detect early fraud signals, respond faster, and keep revenue where it belongs. If shady refunds are eating into your margins, let's talk about a real solution.
