Merchants may be significantly underestimating the role of friendly fraud in the chargeback ecosystem, according to the newly released 2026 Chargeback Field Report from Chargebacks911. While merchants surveyed for the report estimated that friendly fraud accounts for an average of 43.8% of their chargebacks, Visa has previously estimated that approximately 75% of chargebacks are linked to friendly fraud. Chargebacks911’s own internal data places the figure even higher, at 86%, underscoring a substantial gap between merchant perceptions and industry estimates.
Many businesses appear to lack a complete understanding of the scale of first-party fraud and how it could hinder their ability to determine the reasons for disputes or implement successful prevention measures. One key issue identified in the report is that it is challenging to measure how many disputes are the result of friendly fraud because there is often no clear intent related to the dispute. Some chargebacks result from intentionally abusing consumer protections, and others result from confusion, forgotten purchases, buyer’s remorse, or a choice to dispute a charge rather than seek a refund.
According to the report, friendly fraud is becoming an increasingly large concern to merchants as a whole. Establishments that participated in the research indicated that 74.4% of the respondents believed that friendly fraud is a moderate to major area of concern. Seventy-three point seven percent (73.7%) of all merchants having experienced some change in the trend of their dispute activity indicated that they saw increased levels of first-party fraud during this same period, while 83.4% of enterprise establishments indicated that there has been an increase in the presence of friendly fraud over the previous three years.
That tendency coincides with earlier findings by LexisNexis Risk Solutions, which revealed that first-party fraud, i.e. customers falsely disputing charges, exploiting refund policies, or misrepresenting their identities to secure credit, accounted for 38.3% of all reported fraud in 2025.
While consumer rights are thoroughly protected, merchants remain the ones to bear the brunt of so-called “friendly” fraud.
“Chargeback rights are meant to protect consumers and strengthen trust in the payments system, especially online. Unfortunately, protecting buyers often leaves merchants to absorb the cost of fraud and misuse, even when they aren’t responsible,” says Monica Eaton, CEO of Chargebacks911
The study also found that awareness of friendly fraud varies depending on company size. Enterprise merchants were generally more likely than smaller businesses to conclude that friendly fraud represents the majority of their disputes. According to Chargebacks911, this difference likely reflects stronger access to analytical tools, specialized staff, and more comprehensive fraud investigation processes rather than higher exposure alone. Smaller merchants may simply lack sufficient visibility into the true drivers behind their chargebacks.
Beyond measuring the prevalence of friendly fraud, the report identifies several behavioural trends contributing to its growth. Merchants cited intentional first-party fraud, buyer’s remorse, disputes filed while refunds are still pending, and increasingly normalized “chargeback culture” among consumers as leading concerns. The report notes that social media content and online discussions explaining how to initiate chargebacks have made the process more familiar to consumers, while digital banking applications have reduced the friction involved in filing disputes.
The report further highlights that chargebacks themselves continue to become more common. Nearly 62% of surveyed merchants reported experiencing an increase in chargeback volume over the past three years. What’s notable is that respondents indicated that friendly fraud is growing even faster than overall dispute volumes. Taken together, these two findings suggest that first-party misuse is becoming an increasingly important contributor to chargeback growth.
Chargebacks also continue to generate operational and financial pressure for merchants. According to the survey, 38% of respondents said chargeback-related costs have influenced the prices they charge customers.
At the same time, dispute investigations remain highly fragmented, with 23.5% of merchants relying on five or more separate systems to collect evidence and manage representment. These systems often include payment gateways, customer relationship management platforms, customer support software, and order management tools, making investigations both time-consuming and resource-intensive.
The report additionally points to knowledge gaps within merchant organizations. Fewer than one-quarter of respondents described their teams as being “very” up to date on payment network rules governing disputes, while small businesses reported the lowest confidence levels. Internal risks also remain an issue, with nearly one-quarter of merchants reporting employee fraud or internal collusion, although fewer than four in ten actively monitor for such activity.
Artificial intelligence is increasingly becoming part of merchants’ fraud management strategies. Nearly two-thirds of respondents either already use or plan to adopt AI-based fraud prevention tools as they seek to automate investigations and improve dispute handling. According to Chargebacks911, merchants are attempting to respond to a rapidly changing payments environment while balancing rising fraud risks, evolving card network requirements, and increasingly complex operational workflows.
“Many illegitimate disputes get filed with no malicious intent. That said, even chargebacks stemming from cardholder confusion or other benign intentions are a misuse of the system, and contribute to merchant loss.”
Jarrod Wright, SVP of Marketing and Revenue Operations at Chargebacks911
The 2026 Chargeback Field Report is based on proprietary survey responses from more than 250 merchants across industries, business sizes, and geographic markets, with a particular emphasis on card-not-present commerce. The findings illustrate that while merchants increasingly recognize friendly fraud as a growing challenge, significant differences remain between how businesses perceive the problem and the estimates earlier reported by major payments industry participants such as Visa.
