Rise in Charge Disputes
The process of disputing charges with credit card companies has seen a significant rise, with consumers increasingly taking advantage of this system. This trend, known as “friendly fraud,” involves consumers disputing charges for various reasons, even when the charges are legitimate.
Social Media Influence
Social media platforms are playing a role in this increase, with tutorials teaching people how to dispute charges with their credit card companies. Many users claim success in getting refunds, which has further popularized this trend.
Legitimate Disputes
Consumers have the right to dispute charges on their credit card bills if they don’t recognize the charge. This process can be quick and easy, as experienced by Don Kelly, who successfully disputed a $47 charge and received his money back within days.
Alarming Statistics
In 2022, $11 billion in chargebacks were paid out, marking an increase of over 50% compared to pre-pandemic levels. This number is expected to rise by 40% by 2026. While the ease of disputing charges is beneficial for consumers, it also opens the door for fraudulent disputes.
Abuse of the System
Some consumers are exploiting the charge dispute system by falsely claiming they did not make a purchase or were dissatisfied with a product or service. This practice, while termed “friendly fraud,” is far from harmless and significantly impacts businesses.
Impact on Small Businesses
Small business owners, like Brooklyn-based Pilates instructor Cassidy Pilar, are particularly affected by friendly fraud. Each dispute requires time and effort to resolve with credit card companies, costing businesses both time and money. Pilar estimated incurring between $200 and $5,000 in fees last year alone due to disputes.
Business Owners’ Plea
Business owners wish that customers would communicate directly with them to resolve issues before disputing charges. Direct communication can often lead to a resolution without the need for involving credit card companies, saving both parties time and resources.
In conclusion, while the charge dispute process is designed to protect consumers, the rise in friendly fraud is creating challenges for businesses. Increased awareness and better communication between consumers and businesses could help mitigate the negative impacts of this trend.
