Mastercard Targets ‘Friendly’ Fraud With Expanded Program

Mastercard said it is expanding its First Party Trust program to tackle “friendly” fraud.

Also known as first-party fraud, the term refers to genuine transactions that are challenged by cardholders, whether it’s deliberately or happens by mistake, Mastercard noted in a news release Wednesday (June 25).

“eCommerce has revolutionized the transaction experience while also increasing the need for transparency of payments for merchants, small business owners and entrepreneurs,” the release added. “It is now easier than ever for a customer to dispute a debit or credit card transaction they don’t recognize. The card issuer must then determine whether to provide that cardholder with a refund for the transaction amount — this is known as a chargeback.”

The global cost of chargebacks to merchants is projected to rise to $42 billion by 2028, with almost half of those transactions being reported as fraudulent, according to Mastercard’s 2025 State of Chargebacks report.

To help deal with this issue, Mastercard says it is expanding its First-Party Trust program, introduced in 2023, to Canada, Latin America, the Caribbean and across the Asia Pacific region.

“The program assists businesses both big and small with burdensome time and resource-intensive issues, such as researching and addressing claims,” the release added. “It provides enhanced data-sharing, either at the time of transaction or at the time a dispute is raised. Issuers can better identify third-party fraud, where someone’s details are used without consent, from first-party fraud and gain reliable information to resolve cardholder disputes.”

Writing about this issue last year, PYMNTS noted that while friendly fraud is not malicious in the way that actual fraud is, the increase of shoppers disputing legitimate transactions presents a major financial threat to merchants, especially small- to medium-sized businesses (SMBs).

It’s estimated that friendly fraud costs merchants billions of dollars per year, not just in lost sales, but also in chargeback fees, higher transaction costs and possible damage to merchant accounts. Excessive chargebacks can harm a merchant’s reputation with credit card processors, potentially driving up processing fees or robbing them of the ability to accept credit card payments altogether.

“Against this backdrop, SMBs face a dual challenge: preventing friendly fraud while maintaining a smooth, customer-friendly purchasing process,” PYMNTS wrote. “After all, excessive security measures can deter legitimate customers, leading to cart abandonment and lost sales, while a laissez-faire approach can leave SMBs open to abuse and even greater losses.”