The world of small business and personal finance is facing a new era of digital threats, as both entrepreneurs and everyday consumers encounter increasingly sophisticated forms of fraud. From Sydney’s boutique owners losing thousands to cunning online schemes, to American businesspeople discovering their checks have been stolen and forged, the landscape of theft has shifted from the storefront and mailbox to the virtual world. The stories of Ainslie, Sam Kemp, Hal Dillard, and countless others are a stark reminder: as e-commerce and digital banking surge, so too do the opportunities for modern-day thieves.
For Ainslie, a Sydney fashion boutique owner, the realization came as a shock. Over the past eight months, she’s lost more than $2,000 to one fraudulent chargeback and $560 to another. "The money had already been taken from our account both times before we really even had the chance to write anything about the dispute," she told ABC News. The culprit? So-called "friendly fraud," where customers order goods online, receive them, but then dispute the charge with their bank and claim a refund—leaving retailers out of pocket and with no recourse to recover their stock.
This isn’t just an isolated incident. Sam Kemp, who runs Sare Store in Birchip, western Victoria, recently endured two fraudulent chargebacks in a single week. Despite having delivery confirmations, customer communications, and even photos from Australia Post proving the parcels were delivered, the refunds were still taken. "I had confirmed with the customers before sending these orders out, they had confirmed they'd placed the orders … and then I even have photos from Australia Post that the parcels were delivered … and then the chargeback comes through," Kemp explained to ABC News. Her frustration boiled over on social media, where she was inundated with hundreds of messages from other small business owners experiencing the same nightmare. "The losses are huge for small businesses and the stresses are enormous. It really does eat into the profit at the end of the day because there's not a lot of profit."
The digital transformation of commerce, accelerated by pandemic lockdowns, has only intensified the problem. Payments expert Brad Kelly, co-founder of the Independent Payments Forum, observed that by December 2026, "we will do more 'card not present', so e-commerce transactions, than we will 'card present.' That's a complete shift in the way that the payment system works." Unfortunately, he notes, "the dispute and chargeback processes have not kept pace with that." For retailers, the more chargebacks they accumulate, the more red flags are raised with banks and payment platforms, putting their ability to operate online at risk.
Chloe Watts, who runs an online bookstore, described her own ordeal: "I lodged all of that with screenshots of emails, text messages of the customer saying, 'No, I did receive the order' … and it still was denied." She points out the stark difference between traditional theft and online fraud: "If someone comes in and steals stock, there are security protocols that you can put in place. You can have cameras, you can then lodge that with the police and say we have evidence that someone's stolen. [For online theft], there is nothing for us to do."
The issue has caught the attention of politicians and industry leaders. Nationals MP Jane Benham called it "fraud, it's theft," and urged for greater protections for small business. Victoria's opposition small business spokesperson, Brad Rowswell, promised to contact major banks and push for action: "Banking institutions need to realise just how tough it is to operate your small business in the first place, let alone go through this hoop and that hoop … only to get the wrong answer."
Card schemes are starting to respond. A spokesperson for the Australian Banking Association told ABC News that "banks are aware of these concerns from small businesses and, where possible, banks will work with small businesses to resolve any disputes as quickly as possible." Visa, meanwhile, recently introduced rules allowing businesses to use historical purchasing data to fight 'friendly fraud' and protect against repeat chargeback abuse.
Yet, as Brad Kelly points out, challenging a chargeback can be expensive and time-consuming, often "not worth pursuing" for small businesses. He encourages merchants to escalate unresolved disputes to the Australian Financial Complaints Authority (AFCA), saying, "The more merchants that we can get to start raising these issues with [AFCA], the better … because at the moment it's a very unfair and unbalanced system for small and medium businesses." Police, for their part, typically treat fraudulent chargebacks as a matter between businesses and banks, only intervening when crimes are formally reported.
Across the Pacific, Americans are grappling with their own version of digital fraud. In Greenville, businessman Hal Dillard learned the hard way how vulnerable traditional checks have become. After mailing two checks from his home mailbox, Dillard discovered they had been stolen, altered from $749 and $432 to $9,749 and $4,800, and then cashed through mobile banking apps despite forged signatures. "I didn’t understand how this could get through the system," he told WSPA 7NEWS. The U.S. Treasury recently reported over 15,000 mail theft-related check fraud cases totaling $688 million in just six months.
John Gregory, Chief Operating Officer at Arthur State Bank, explained that while banks have multiple screening processes and monitor accounts—especially repeat victims—scammers are adept at bypassing security measures. "They do look for different security features to make sure that they’re valid. But, unfortunately, in situations like that, scammers are able to leave certain things in place to get it to pass initial inspection," Gregory said. Mobile banking apps, he noted, can help customers spot suspicious activity immediately by sending transaction notifications, but vigilance is still essential.
The criminal rings behind these schemes are organized and tech-savvy. U.S. Postal Inspector Breslin Steverson described how stolen checks are sold on apps like Telegram, then counterfeited and cashed by "runners" at various banks. In response, the USPS has launched Project Safe Delivery, retrofitting blue mail drop boxes with slits and rakes to prevent thieves from fishing out mail.
After a three-week investigation, Arthur State Bank returned Dillard’s stolen funds. Gregory reassured customers: "If our customer was done wrong, we’re going to make our customer whole." But he cautioned that not all cases end so well—distinguishing between fraud and scams is crucial, as banks are less likely to reimburse customers who are tricked into sending money themselves.
Dillard, for his part, has learned his lesson: "I will never put any payment or check or anything in our personal mailbox again. I would take that directly to the post office."
As commerce continues its inexorable march online, the battle between convenience and security remains fierce. For small business owners and consumers alike, the message is clear: vigilance, advocacy, and smarter systems are needed to stay one step ahead of the digital thieves.
