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Trade wars, inflation, uncertainty push UK consumers to 'weaponize' chargebacks

Wednesday, May 21, 2025 — 16:21:56 (UTC)

LONDON, United Kingdom — May 21, 2025 – Chargebacks911, a global leader in dispute resolution and chargeback prevention, is warning UK merchants that inflationary pressures, trade disruption, and weakening consumer confidence are creating the perfect conditions for a sharp rise in chargeback abuse.

As household budgets shrink and financial anxiety grows, more consumers are turning to chargebacks—both intentionally and unintentionally—as a way to reclaim funds from legitimate purchases. This growing trend, known as first-party misuse or "friendly fraud," is costing UK retailers millions in lost revenue, operational costs, and reputational damage.

“Economic stress often changes consumer behaviour,” said Monica Eaton, CEO of Chargebacks911. “We’re seeing more cardholders exploit chargebacks not because they didn’t receive the product or service, but because they’re looking for ways to manage financial strain. Unfortunately, it’s the merchant who foots the bill.”

The UK economy narrowly avoided a recession in early 2025, but conditions remain fragile. In Q1 2025, GDP stagnated, inflation remains persistently high at 3.5% in April, up from 2.6% in March, according to official data, and household debt reached a record high of £1.8 trillion, according to the Bank of England. Meanwhile, consumer confidence fell to a 14-month low in April, driven by the cost-of-living crisis and continued volatility in global markets.

In addition, ongoing trade uncertainty—stemming from Brexit-related barriers and retaliatory tariffs from global partners—has led to increased supply chain disruption and higher import costs, particularly in food, electronics, and textiles.

These conditions are reflected in rising fraud rates. According to LexisNexis’ latest Cybercrime Report, friendly fraud accounted for 36% of all global fraud in 2024, up from just 15% the year before. Experts warn that figure could grow even higher in the UK if economic conditions worsen.

Chargebacks911 urges UK businesses to adopt a proactive, data-driven approach to mitigating chargeback fraud. The company recommends the following steps:

Monitor for Dispute Trends and Early Warning Signs Audit chargeback data to identify recurring codes such as “item not received” or “unauthorised transaction.” Monitor for sudden spikes in disputes across specific products or geographies.

Improve Customer Communication and Documentation Make refund, cancellation, and return policies clear at every purchase stage. Provide timely confirmations and tracking details for all orders. Retain digital evidence of each sale, including delivery logs, IP addresses, and customer interactions.

Train Frontline Teams Educate staff on the warning signs of chargeback abuse. Encourage early resolution of disputes through customer service rather than letting issues escalate to the bank.

Use Technology to Stay Ahead Deploy real-time chargeback alert systems to intercept disputes before they’re finalised. Automate representments using AI tools that compile the strongest possible evidence to reclaim revenue.

Don’t Absorb Chargebacks Without Investigation Every chargeback is a potential red flag—track and learn from each case. Prioritise disputes tied to high-value goods or repeat offenders to deter future abuse.

“We’ve seen this pattern emerge before—COVID in 2020, inflation in 2022, and now the uncertainty of 2025,” said Eaton. “Retailers who act now will be better equipped to withstand both economic and fraud-related shocks.”

While some forecasters, including the Bank of England, predict a modest economic rebound later this year, the reality on the ground for many UK merchants is continued volatility and risk. With chargebacks becoming increasingly weaponised by financially stressed consumers, Eaton says retailers need to treat them not as an operational nuisance—but as a strategic threat.

“Chargebacks are no longer just a cost of doing business—they’re a symptom of deeper financial pressure and evolving fraud,” said Eaton. “But they’re also a threat you can manage—if you have the right systems, tools, and mindset in place.”

For more information on Chargebacks911, visit www.chargebacks911.com.

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About Chargebacks911

Chargebacks911® is the global leader in chargeback prevention and remediation technology. As a platform provider to merchants and financial institutions, Chargebacks911 is the first global company fully dedicated to providing an end-to-end platform specifically designed to counter post-transactional fraud and chargeback misuse. Today, Chargebacks911 safeguards more than 2.4 billion transactions per year on behalf of clients in 87 countries around the world, supporting over 2.5 million merchants. For details on Chargebacks911’s comprehensive dispute management solutions, visit chargebacks911.com.

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Source: Company press release.

Categories: Reports and research