Merchants Have Underestimated Friendly Fraud Rates
New industry research reveals a significant gap between merchant perceptions of fraud and actual chargeback data.
Updated on Sept. 28, 2026 in Financial Crime
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The 2026 Chargeback Field Report from Chargebacks911 highlights a major discrepancy in how merchants view transaction disputes. While businesses estimate that friendly fraud accounts for 43.8% of chargebacks, internal data suggests the figure is as high as 86%.
Why it matters
Merchants may be misallocating their fraud prevention resources by relying on inaccurate assumptions about the source of transaction disputes. This misalignment risks leaving businesses vulnerable to evolving tactics that bank reviews have increasingly flagged as first-party fraud.
Bank reviews found evidence warranting investigation in 83% of cases suspected by retailers to involve first-party fraud. Meanwhile, 83.4% of enterprise merchants have observed an increase in these incidents over the last three years.
The players
Chargebacks911
This organization specializes in dispute management and fraud prevention technology for the global payments industry.
Visa
This global payments technology company provides data and infrastructure that supports secure financial transactions for merchants and banks.
The details
Merchants are urged to utilize AI and machine learning tools to better connect transaction, customer, and dispute data. By identifying patterns in these datasets, businesses can improve their accuracy in distinguishing genuine customer issues from friendly fraud.
Timeline
Over the past three years, enterprise merchants have seen an increase in friendly fraud.
Search interest regarding friendly fraud reached an all-time high in 2026.
Legal Context
This reporting follows a pattern set by the 2026 Chargeback Field Report, which identifies a widening gap between merchant perception and actual financial evidence. It suggests a systemic trend where businesses struggle to keep pace with evolving first-party fraud definitions.
Businesses may face tighter security requirements or updated verification processes as retailers attempt to curb fraudulent activity. Customers could experience more rigorous identity checks during transactions to prevent disputes that are later identified as friendly fraud.
The takeaway
Merchants should prioritize data-driven tools over subjective estimates to effectively combat rising friendly fraud. Implementing advanced machine learning can help distinguish between legitimate customer service disputes and intentional first-party fraud.
Further reading
Learn more about the latest trends in Financial Crime.
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Do you trust that businesses accurately identify the causes of their customer disputes?
