Online sellers are seeing a sharp rise in e-commerce fraud & chargebacks as we head into 2026. This “chargeback tsunami” is coming from both organized fraudsters and regular customers who abuse the system. Most disputes now involve “friendly fraud,” where legitimate customers dispute valid purchases. In many e-commerce sectors, analysts estimate that about 60-75% of chargebacks fall into this category rather than being caused by stolen cards or hacking.

Chargeback volumes continue to climb, with global disputes expected to reach approximately 261 million by 2025 and 324 million by 2028. That adds up to significant losses: online merchants are set to lose more than $30 billion to chargebacks in 2025 alone (roughly $33–34 billion by some estimates). And the actual cost is even higher, since merchants usually pay $3-$4 in total costs for every $1 of fraud once you add fees, lost goods, and staff time.

The upside is that savvy merchants can counter by spotting emerging fraud patterns (especially friendly fraud) and implementing layered defenses, including stronger fraud filters, more transparent communication, tracking, new network rules, and strong customer service.

Friendly Fraud on the Rise

First-party, or “friendly,” fraud occurs with a valid card and a mostly honest transaction. It occurs when a real customer makes a purchase, receives (or retains) the goods or services, and later disputes the charge, claiming it was unauthorized or not delivered. Common motives include simple buyer’s remorse, confusion (especially with subscriptions or trial offers), or even families sharing a card without permission.

Because the transaction appears legitimate, friendly fraud can be hard to spot until weeks later, when the chargeback is issued. By then, the merchant has already shipped the item or provided the service and has collected payment. The cardholder typically initiates the chargeback process, resulting in the merchant losing both the item and the sale and incurring any dispute fees.

Today, this problem is everywhere. Industry research shows that friendly fraud now drives most online disputes. In one survey, 72% of merchants reported a surge in friendly fraud incidents. Analysts estimate that friendly fraud makes up roughly 60-75% of chargebacks in high-risk online sectors (in some reports, even higher), far above actual stolen-card fraud. Put differently, the vast majority of chargebacks today are actually real customers disputing legitimate transactions.

This shift has several causes:

• The post-pandemic normalization of shopping patterns,
• Exploding subscription services, and
• Consumer behavior

Many shoppers now subscribe to multiple services and may forget to renew, then dispute the charge when it appears on their statement. Others regret an impulsive purchase or find an easier way to get a “free return.”

Specific industries feel the friendly-fraud pinch even more. Digital goods, gaming, and subscription services all report especially high rates of “first-party” fraud. Travel is another flashpoint: consumers who miss a flight or decide not to travel often dispute airline or hotel charges rather than work it out with the provider. Post-pandemic habits play a role here.

Studies of travel merchants show higher “no show” disputes due to weather or personal reasons, and retailers note that Gen Z shoppers, in particular, sometimes dispute purchases out of impulse or confusion. Even everyday purchases, such as healthcare or auto service, can lead to disputes if the customer misunderstands the plan. In all these cases, from the merchant’s point of view, the sale seemed normal and above-board until the dispute arrived out of the blue.

Why friendly fraud is so tricky: It appears to be a regular sale. The transaction is approved, the product ships, and customer communications may all go smoothly. There is nothing to suspect at the point of purchase. Then weeks later, often after the product was delivered, the merchant is blindsided by a chargeback notice.

By that time, the merchant’s evidence may be thin (for example, “proof of delivery” is harder when everything was digital or intangible). Card-issuing banks tend to side with their customers in borderline cases unless the merchant can provide convincing proof. That means merchants must be disciplined in their record-keeping and post-sale communication to combat friendly fraud.

Chargeback Tsunami – Costs and Trends

The scale of the chargeback problem is enormous and continues to grow. Last year, roughly 238 million chargebacks were filed worldwide, and industry forecasts indicate that number will rise dramatically. By 2025, it’s projected to reach around 261 million global disputes, and by 2028, over 320 million. (Some analysts even see 337 million by 2026 under certain assumptions.)

This increase, on the order of 24% or more in a few years, reflects not just more e-commerce, but also how easy dispute filing has become. It also mirrors rising online fraud, with digital fraud losses up about 15% in 2024, indicating more charges are being flagged as suspicious by banks and customers.

For merchants, the financial impact is staggering. In 2025 alone, e-commerce businesses are expected to lose more than $30 billion due to chargebacks. One estimate pegs the global value of disputed transactions at roughly £33.8 billion (about $40 billion) in 2025, resulting in significant refunds and lost inventory. And that’s just the refunds; the actual cost is much higher.

Every dispute incurs fees and overhead: card networks typically charge a fixed chargeback fee (often $15-$25) per case, and merchants incur additional logistics costs, administrative time, and higher processing costs as chargebacks rise. Industry research shows that, once you tally staff hours, fees, lost sales, and penalties, merchants pay roughly $3.75- $4.60 for every $1 in fraud or chargeback losses. In other words, a single $100 fraudulent chargeback can cost a merchant nearly $400 in total costs.

Beyond direct dollar losses, excessive chargebacks can threaten a business’s ability to operate. Credit card brands like Visa and Mastercard monitor each merchant’s chargeback rate (the percentage of transactions that turn into disputes). If a merchant’s chargeback ratio creeps over about 0.5–1% for any month, it often triggers a “chargeback monitoring” program. Merchants in those programs face fines, higher fees, and the need to implement mitigation plans.

If problems persist, a processor may even shut off the merchant’s ability to accept cards. In practice, that means a few chargebacks don’t just steal revenue – they erode trust in the merchant. Regulators and bank underwriters worry that a merchant losing money to chargebacks may be more likely to raise prices or squeeze legitimate operations. Keeping chargebacks under control is critical to avoid losing merchant accounts or being placed on high-risk status.

Tools and Tactics to Combat E-Commerce Fraud & Chargebacks

Merchants that fight back combine two strategies: first, prevent outright fraud and high-risk transactions up front; second, prepare to handle chargebacks vigorously when they occur. No single tool solves everything; today’s best defense is a layered approach that weeds out bad orders while keeping honest customers happy. Here are the key tactics:

1. Robust Fraud Screening

Use every available fraud filter. Modern fraud prevention platforms use machine learning to analyze each transaction in real time, flagging suspicious patterns, like repeated high-value orders from new accounts, mismatched shipping and billing addresses, or out-of-country cards. Always check the CVV (card security code) and AVS (Address Verification System) on every order – these simple checks can automatically stop a surprising share of fraud attempts. Merchants using AVS see roughly a 15-20% reduction in fraud-related chargebacks by verifying billing addresses. Even when they do block a payment, it’s better than shipping a product you won’t get paid for.

Crucially, implement 3-D Secure 2.0 (the updated version of “Verified by Visa”/”Mastercard SecureCode”). 3DS2 adds an extra identity verification step (such as a one-time SMS code or biometric check) for high-risk transactions. When done right, 3DS 2.0 shifts liability away from the merchant for fraudulent card-not-present charges, reducing fraud chargebacks significantly while keeping the checkout experience smooth. Studies show 3DS and tokenization together can cut CNP fraud by 15-20% or more.

2. Clear Billing Descriptors & Policies

Many chargebacks happen simply because the customer doesn’t recognize the merchant or the charge. Make sure your billing descriptors, the name that shows on the credit card statement, are clear and recognizable – ideally matching your store or brand name. In shopping carts and confirmation emails, use consistent company names and include a contact number or email so that confused buyers can verify before disputing.

Also, simplify refund and cancellation terms. Hard-to-find or confusing return policies prompt impatient customers to dispute with their bank rather than contact you. Spell out product details plainly on the website and in confirmations. For subscription services, send clear reminders when a trial is about to end or a recurring charge will hit. Taking just a few steps like these can dramatically cut misunderstandings.

One recommendation: some savvy merchants send a pre-charge email or SMS that says, “Your [Service] subscription renews tomorrow for $X. Click here to cancel or update your subscription.” This slight nudge often stops customers from filing an “unauthorized” dispute next week.)

3. Proof of Delivery and Order Tracking

When a product is shipped, enable tracking and delivery confirmation. If a customer says, “I never got the item,” a tracked delivery slip or GPS delivery record can be decisive evidence. For digital goods or services, maintain usage or download logs. Whenever possible, collect a signature (including an e-signature) to confirm receipt of high-value items.

Going the extra mile by having a courier-delivered package signed or geo-verified provides proof that should win disputes. One study found that giving clear tracking information and delivery alerts reduced “item not received” disputes by about 25%. At the very least, a photo of the package at the doorstep, stamped with the date/time, can deter a buyer from claiming it was never delivered.

4. Fast Response and Representment Tools:

Chargebacks must be challenged promptly and supported by substantial evidence. Sign up for chargeback management software or services that alert you immediately when a dispute is filed. (For instance, card schemes now offer dispute alerts through partners like Ethoca or Verifi.) An alert lets you contact the customer right away, often resolving misunderstandings before a formal chargeback.

If a formal dispute arises, use chargeback reprieve platforms to automatically assemble the required documents and meet tight deadlines. These systems typically include representation software that packages the transaction history, proof of shipping, customer communications, and more, then submits it to the bank under the right reason code. Since only about 8-25% of chargeback disputes succeed for merchants without strong tools, having an organized representment process is vital.

5. Leverage Card Network Rules (Compelling Evidence, PSD2, etc.)

Card networks have updated their rules in recent years to help merchants fight friendly fraud. Visa’s Compelling Evidence 3.0 now lets merchants submit enhanced proof during disputes – even evidence of prior legitimate transactions or prior authorization flows, to show that the customer did indeed use the card. In practice, this means you can link a friendly fraud claim (“I never bought this”) to the fact that the same customer has used the card for smaller purchases or to auto-pay subscriptions.

When used correctly, these expanded evidence rules can sway issuers. Similarly, Europe’s PSD2 (Strong Customer Authentication) mandates two-factor authentication on online payments – this extra validation (like a fingerprint or code) makes it much harder for a consumer to claim fraud later. Merchants should stay up to date on all applicable rules and submit all available evidence, including proof of customer identity confirmation, correspondence logs, and accepted service terms. Even something as simple as showing an order confirmation email or online chat log can tip a dispute in your favor.

6. Excellent Customer Service as Prevention

Sometimes the best chargeback to win is the one that never happens. Encourage customers to reach out by providing easy support channels. For confused or unhappy buyers, a quick refund or exchange through your support team can salvage the sale and avoid a bank dispute. Especially for subscription or trial-related misunderstandings, a well-timed outreach (“I noticed your plan renewal – do you have any questions?”) can help prevent chargebacks. Train your service reps to recognize when a customer is upset enough to file a dispute and to offer solutions immediately.

In other words, treat refunds as a cost of excellent service that pays for itself. Data show that many disputes are “resolvable” if the merchant communicates clearly and sympathetically. Good communication also means sending receipts and reminding customers about upcoming payments. Even a brief note (“You’ll see the charge on your bill from MyStore.com on May 10th”) can reduce those “unknown charge” disputes.

7. Monitor Chargeback Metrics

Finally, monitor your chargeback rates and reasons closely. Set internal alerts if the ratio begins to rise. Track the most common dispute codes and drill into root causes. If, for example, you see a jump in “product not as described” claims, it’s a cue to improve product images or descriptions. If disputes cluster in a specific geography or customer segment, consider tightening fraud rules for that area or segment.

Many merchants use analytics from their payment gateway or a specialized dashboard to visualize trends. By identifying problems early, you can adjust your policies or technology to mitigate them before they significantly impact you.

Conclusion

Fighting chargebacks in 2026 means a two-pronged approach. On one side, use advanced fraud tools (AI filters, CVV/AVS checks, 3DS authentication) to prevent fraudulent orders from being approved. On the other side, when disputes do occur (especially friendly-fraud disputes), use clear evidence, new network rules, and innovative customer outreach to win them back. When layered correctly, these tactics can dramatically reduce losses.

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