Chargebacks911 highlights gap in friendly fraud estimates
Chargebacks911’s 2026 Chargeback Field Report has found that merchants may be underestimating friendly fraud, making it harder to identify sources of dispute-related losses. Surveyed businesses estimated that such activity represented 43.8% of their chargebacks on average, while other industry data indicated a considerably higher rate. The report cautioned that these datasets are not directly comparable, but said the disparity highlights difficulties in distinguishing criminal fraud, legitimate customer complaints, and first-party misuse.
Friendly fraud remains a growing concern
The study, based on more than 250 merchant responses, found that 74.4% considered friendly fraud a moderate or significant concern. Among respondents reporting a change, 73.7% had seen an increase in friendly fraud over the past three years, rising to 83.4% among enterprise merchants. The research describes friendly fraud as disputes arising after legitimate cardholder transactions, including confusion, buyer’s remorse, refund frustration, or intentional abuse. The report said 73.7% of merchants reporting a change had observed an increase in friendly fraud.
The report also highlighted several dispute patterns that can contribute to merchant losses. Chargebacks filed while refunds are being processed can create duplicate credits when both mechanisms succeed. Meanwhile, 38% of respondents said chargeback costs had influenced their prices, up from 32.5% in 2024. Separately, 62% described refund abuse as a moderate or significant concern. Nearly one-quarter also reported employee-initiated fraud or in-house collusion, although fewer than four in ten said they actively monitored that risk.
Data visibility shapes fraud responses
Chargebacks911 said merchants need broader visibility across transaction, customer, and dispute information to understand where losses originate. The report found that 26.7% currently use AI-based fraud prevention tools, while 37% plan to adopt them. Nearly 62% said chargebacks were becoming more frequent, while 61.8% reported worsening associated costs. One in five respondents said changes associated with Visa’s Acquirer Monitoring Program had affected their business.
The report also referenced findings from the British Retail Consortium’s Tackling Customer Fraud: Progress to Date report, which examined the role of banks in identifying suspected first-party fraud. In 83% of the cases reviewed, the banks either confirmed evidence of first-party fraud or found sufficient evidence to warrant further investigation. The findings showed that bank-level review can provide additional evidence when assessing suspected first-party fraud.
