Financial institutions (FIs)and merchants experience high levels of first-party fraud chargebacks, in which cardholders perform a transaction but later in form their FI they did not make the purchase to avoid financial liability. This results in significant operational costs and write-offs. The problem exists in both the U.S. and the U.K. but at differing levels and growth rates. By most FI and merchant estimates, the problem is only getting worse, as cardholders who successfully engage in first-party fraud are rewarded by avoiding financial liability for transactions they initiated.

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