Chargebacks are often treated as a back-office problem, but a recent industry report suggests that dispute management deserves attention across the entire customer-payment process.
In an August 28, 2026 article, Digital Transactions reported on findings from Chargebacks911’s 2026 Field Report. The article was written by Kevin Woodward and said the report relied on responses from more than 250 merchants.
According to the report as described by Digital Transactions, 43.8% of chargebacks were labeled friendly fraud. The figure is a reported industry finding—not a universal rate for every business, industry, card network, or payment channel. Merchants should use it as a reason to review their own dispute patterns rather than as a forecast of their individual chargeback exposure.
What is friendly fraud?
Friendly fraud, also called first-party fraud in some contexts, generally involves a cardholder disputing a transaction that the merchant believes was authorized or fulfilled. The circumstances can vary widely.
A dispute may involve an intentional attempt to obtain a refund while keeping the merchandise, a customer who does not recognize a billing descriptor, a buyer who expected a refund to arrive more quickly, or a genuine merchant error that becomes part of the dispute record.
The Digital Transactions article notes that Visa defines friendly fraud as a situation in which a cardholder makes a legitimate purchase and then falsely disputes it while retaining what was purchased. In practice, however, not every dispute is easy to classify. The same report reportedly described a continuum involving cardholders, merchants, banks, and automated decision systems.
That distinction matters. A merchant should not assume that every chargeback is customer abuse, and a customer should not assume that a chargeback is simply another name for a refund.
What the 2026 report findings may indicate
Digital Transactions reported several findings from the Chargebacks911 report:
- 43.8% of total chargebacks were labeled friendly fraud.
- 83.4% of enterprise merchants reported an increase in friendly fraud in 2026.
- 77% of mid-market merchants reported an increase.
- 55% of small businesses reported an increase.
- Chargebacks911 said 86% of the chargebacks it handles result from friendly fraud, based on its internal data.
- Nearly 80% of merchants said they were using at least one preventive measure.
These figures come from different populations and should not be blended together. The 86% figure reflects Chargebacks911’s internal case data, while the 43.8% figure is presented as a finding from the field report. Neither number should be treated as a guaranteed benchmark for a particular merchant.
The report also identified several categories that merchants considered important concerns. Digital Transactions reported that 53.7% of merchants named intentional chargeback fraud as a top concern, followed by buyer’s-remorse chargebacks at 39% and learned chargeback-abuse behavior at 37.5%.
Why chargeback labels can be difficult to interpret
A chargeback reason code may not tell the full story of what happened between a business and its customer. A customer may dispute a payment because the merchant name on the statement is unfamiliar, a recurring charge was not canceled correctly, an item arrived late, or a promised refund was still pending.
Other disputes may involve a true unauthorized transaction, a stolen payment credential, a delivery problem, or a customer who knowingly attempts to reverse a legitimate purchase.
For that reason, reviewing the underlying transaction record is more useful than relying only on a label. A merchant may need to connect the payment to the order, customer communication, fulfillment record, refund history, device or login information, and delivery confirmation.
Friendly fraud is not the same as a customer-service failure
Some disputes may be preventable through better customer communication, but that does not mean every dispute reflects poor service. Merchants should separate at least four questions:
- Was the transaction authorized?
- Was the product or service delivered as promised?
- Did the customer receive a clear way to request help or a refund?
- Does the evidence support the merchant’s response to the dispute?
A clear billing descriptor, accurate product description, visible cancellation terms, and responsive support can reduce confusion. They cannot eliminate all disputes, and they should not be presented as a guarantee against chargebacks.
Practical ways merchants can prepare
Use a recognizable billing descriptor
The name that appears on a customer’s card statement should be recognizable and consistent with the business’s public identity where the processor and card-network rules allow. Confusing descriptors can lead customers to contact their bank instead of the merchant.
Keep complete order and delivery records
For card-not-present transactions, retain relevant records such as order details, customer communications, fulfillment information, delivery confirmation, device or account data where appropriate, and refund records. Keep only information the business is permitted to retain and protect it appropriately.
Make refund and cancellation policies easy to find
Policies should be written in plain language and presented before purchase when possible. If a customer requests a refund, document the request, the response, the date, and the status of any refund. A pending refund and a chargeback are different processes.
Train staff on dispute prevention
Employees who take orders, handle cancellations, issue refunds, or answer customer questions should know how those actions affect later documentation. Consistent procedures are especially important for subscriptions, deposits, custom orders, memberships, and delayed fulfillment.
Review dispute patterns by reason and channel
Look for concentrations by product, sales channel, location, billing descriptor, fulfillment method, transaction type, or customer journey. A pattern may point to a communication gap, a processing configuration issue, a product problem, or a type of dispute that requires a different response.
Respond to disputes with relevant evidence
A dispute response should address the specific claim and include organized, relevant records. More documentation is not always better; unrelated material can make the response harder to evaluate. Merchants should follow their processor’s deadlines and evidence requirements.
What merchants should not do
Merchants should not automatically label every customer dispute as fraud. They should not pressure customers to withdraw legitimate claims, store sensitive payment data outside permitted systems, or assume that a successful transaction proves the customer received what was promised.
They should also avoid making unsupported claims that a particular tool, processor, or policy will prevent chargebacks. Fraud and dispute controls reduce risk; they do not remove it.
How payment-processing decisions fit into chargeback management
Chargeback exposure can be affected by more than the processor’s advertised rate. When reviewing a payment setup, a business may want to ask:
- What dispute alerts or prevention tools are available?
- What documentation is needed for representment?
- How are recurring payments and refunds handled?
- Which billing descriptor will customers see?
- How are card-not-present transactions authenticated?
- What reporting is available by reason code and transaction channel?
- Who supports the merchant when a dispute is time-sensitive?
The answers depend on the processor, gateway, POS system, payment channel, business model, and written agreement. A merchant statement review can help identify processing-related charges and services, but it does not by itself determine whether a dispute will be won.
Businesses comparing payment systems can also review credit card processing, POS systems, and payment processor restrictions as part of a broader operational review.
A balanced takeaway from the report
The Digital Transactions article and the Chargebacks911 findings it summarizes point to a practical conclusion: merchants should treat chargeback management as part of customer experience, payment operations, and risk documentation—not only as a task that begins after a dispute arrives.
The reported 43.8% friendly-fraud figure is notable, but the meaning of a dispute still depends on the transaction and the evidence. A merchant’s best response is to understand what customers see, document what the business delivered, communicate policies clearly, and evaluate prevention tools without assuming they are a complete solution.
For additional background, read the original Digital Transactions report article and consult the underlying Chargebacks911 report where available.
Frequently asked questions
What is friendly fraud?
Friendly fraud generally refers to a cardholder disputing a transaction that the merchant believes was authorized or fulfilled. The facts can range from intentional misuse to confusion, buyer’s remorse, merchant error, or other circumstances, so each dispute requires individual review.
What percentage of chargebacks were described as friendly fraud in the report?
Digital Transactions reported that Chargebacks911’s 2026 Field Report labeled 43.8% of total chargebacks as friendly fraud. The figure came from the report and should not be assumed to represent every merchant or payment channel.
Is friendly fraud the same as an unauthorized transaction?
Not necessarily. Friendly fraud is often used for first-party disputes involving a legitimate cardholder account, while unauthorized transactions may involve stolen credentials or another type of third-party fraud. Classification depends on the circumstances and evidence.
How can a small business reduce avoidable chargebacks?
Businesses can use recognizable billing descriptors, clear refund and cancellation policies, complete order and delivery records, responsive customer support, staff training, and regular review of dispute patterns. No measure guarantees that chargebacks will be eliminated.
What evidence can help with a chargeback response?
Depending on the dispute and processor requirements, relevant evidence may include order details, customer communications, proof of delivery or service, refund records, terms accepted at checkout, and transaction or account information permitted by applicable rules.
Is a chargeback the same as a refund?
No. A refund is generally initiated by the merchant, while a chargeback is a dispute process initiated through the cardholder’s bank or card network. A business should document both processes separately.
Source and attribution
This article is an original educational analysis by Custom Payments LLC. It reports and discusses findings described by Kevin Woodward in Digital Transactions’ August 28, 2026 article, “Nearly 44% of Chargebacks Are Labeled Friendly Fraud, Finds a Chargebacks911 Report.” Statistics and definitions attributed to the article are identified as reported findings; readers should consult the original article and underlying report for complete methodology and context.
This article is general educational information, not legal, compliance, fraud-investigation, or financial advice. Merchants should consult their processor, acquiring bank, legal counsel, or qualified compliance professional for guidance specific to their business and payment environment.