Most chargebacks are deemed friendly fraud

Chargebacks911, a chargeback management provider, has found that nearly 44% of chargebacks are labeled as friendly fraud, according to its 2026 Field Report. This type of fraud, also known as first-party fraud, occurs when a cardholder makes a legitimate purchase and then falsely disputes the charge to get a refund while retaining what was purchased.

The report, which relied on responses from more than 250 merchants, found that 83.4% of enterprise merchants reported an increase in friendly fraud in 2026. Additionally, 77% of mid-market merchants and 55% of small business merchants also reported an increase in friendly fraud.

Visa Inc. defines friendly fraud as instances when a cardholder makes a legitimate purchase and then falsely disputes the charge to get a refund while retaining what was purchased, whether intentional or unintentional. Chargebacks911’s internal data show that 86% of all chargebacks it handles are a result of friendly fraud.

This type of fraud can range from clearly unauthorized transactions to merchant errors and valid customer disputes, according to Chargebacks911. The report notes that cases exist where attribution depends on the specific circumstances of the transaction.

The “blame” often falls somewhere along a continuum rather than on one party, including banks, typically ones using AI. This overlap makes it difficult to definitively classify every claim, the report says.

Merchants say intentional chargeback fraud is a top concern, with 53.7% of them citing it as such, followed by buyer’s-remorse chargebacks, 39%, and learned chargeback-abuse behavior, 37.5%. These categories may account for much of the friendly fraud, but they also may manifest when cardholders exploit perceived loopholes, seek to reverse unwanted purchases, or follow patterns they’ve observed in other environments.

Chargebacks911 notes that these patterns are also reflected in prior research, including the 2025 Cardholder Dispute Index, which found that cardholders are often unwilling to wait several days for a refund, driven in part by the mistaken belief that chargebacks are equivalent to refunds.

Nearly 80% of merchants say they are using at least one preventive measure, implying that chargeback management could be migrating to a core effort, instead of being a strictly back-office function.

Chargebacks911’s report highlights the importance of preventive measures in reducing friendly fraud. By implementing strategies such as clear communication, transparent return policies, and proactive customer support, merchants can reduce the likelihood of chargebacks and minimize their impact on business operations.

Merchants can leverage technology and data analytics to identify and mitigate potential risks, such as suspicious transaction patterns or high-risk customer behavior. By taking a proactive approach to chargeback management, they can protect their businesses and maintain a positive customer experience.