The Fraud vs. Convenience Tug-of-War Is Loosening Its Grip

Once, my oldest brother Marc found a mysterious Nintendo game charge on his card statement. It wasn’t fraud. It was a $100 charge from his then six-year-old son who figured out his dad’s Nintendo password and purchased a downloadable game. When I asked my brother how he did that, Marc texted: “lol he must have been watching me.”

My brother is in all kinds of company feeling surprised by a transaction. A quick scroll of Reddit threads shows consumers fretting over inexplicable charges or disputes they wish they could undo. A couple forgot about five months of subscription charges because they thought it was on another card. Someone else didn’t recognize the merchant name in their banking app. Both filed disputes before realizing their errors. Still others are committing fraud on purpose by disputing charges for items they bought and received whether out of entitlement, regret, mounting financial pressure or a flawed TikTok tutorial.

And filing disputes is on the rise. By Juniper Research’s count, American consumers filed 158 million disputes in 2025, up 29% from 2021. Not all of them have merit. In industry parlance, that’s called friendly fraud and it’s hard to put a precise number on it. Alloy’s 2026 state of fraud report noted that many banks don’t investigate chargeback fraud cases under roughly $50 or less.

Solving these kinds of dispute riddles costs banks money. According to Mastercard, financial institutions in the U.S. spend $9.08 to $10.32 for every dispute they process on average, largely because of operational and staffing costs of investigating these cases.

I did a small casual poll on my LinkedIn and those who responded said they have filed disputes that were an “oops,” two citing family purchase confusion as reasons why it occurs. A larger Datos Insights report commissioned by Mastercard backs that finding up: 48 percent of consumers have mistakenly disputed a legitimate charge.

For years, the industry treated this as a tug-of-war game: prevent fraud or provide a positive customer experience. But the data suggests a more nuanced story. A better experience for a portion of the population might mean a digital banking app that helps determine whether it’s fraud or confusion before a dispute is filed.

That’s because a slice of some of those disputes weren’t fraud per se. They were filed because consumers didn’t remember they bought something or didn’t recall someone in their family did or the price seemed too steep. Who among us hasn’t thought it’s fraud when the gas charges appear in bank statements from more recent months?

Now, the tug-of-war is loosening its grip. While it’s easier than ever for consumers to file disputes, adding a touch of friction or added information can actually make the banking app more useful.

Consider how Casap, a dispute automation platform, won Best of Show at 2025 FinovateFall for its technology that is designed to help resolve disputes and eliminate first-party fraud. That kind of tool winning reveals a real industry need for a different kind of dispute experience.

“The true cost of disputes is in trust,” Casap CEO and Co-Founder Shanthi Shanmugam said in an interview at FinovateFall in 2025. Most institutions take 90 days or so to resolve dispute cases, she noted, leaving customers with provisional credit that may get rescinded if the merchant says otherwise. “That’s a very trust-breaking experience.”

The Casap product, meanwhile, includes a tracker to help the consumer know where the dispute stands and reminds them when they have, say, paid for an annual subscription for the past seven years if they wished to reconsider filing a dispute about that particular charge.

Spade is another fintech company that wants to help eliminate friendly fraud by offering up more details on the transactions, like displaying the merchant’s address and logo. In late March, Spade raised $40 million in series B funding to help it grow.

Atomic sees its own patterns. In a recent video interview, CEO and Co-Founder Jordan Wright says 10% to 15% of charges going into dispute are subscriptions that customers signed up for but meant to cancel or pause. That’s among the reasons why Atomic lets financial institutions present their customers with an option to cancel the subscription within their banking app. It’s also why adding SKU-level data can help prevent the kind of memory-lapse disputes when a consumer is simply forgetting that the Amazon purchase of $75 is legitimate. If they saw the itemized charges (towels and textbook), they might just remember they were the shopper.

Banks and credit unions need a wide range of tools to help combat fraud, but among the things that may help at a time when filing disputes is growing and easier than ever: clearing up some of the transaction confusion. Simply put: What masquerades as a fraud problem is really, at times, a design limitation.

Watch Jordan break down the dispute-subscription connection in more detail below, including how PayLink Manage gives banks a way to catch these cancellations before they become disputes.

Related:

• Dispute reduction has a ceiling. Here’s how to raise it