More than eight in 10 retailers have reported an increase in friendly fraud, according to findings in a report from Chargebacks911, which features insights into where artificial intelligence (AI) fits into the prevention.
Friendly fraud refers to when cardholders dispute legitimate transactions. Chargebacks911 provides technology for chargeback prevention and remediation. In its 2026 Chargeback Field Report, it found that 74.4% of retailers describe friendly fraud as a significant concern. The report also found that about two-thirds of merchants currently use AI-based fraud-prevention tools — or plan to.
Chargebacks911 said among merchants who reported a change in friendly fraud over the past three years, 73.7% said the problem had worsened. That figure rose to 83.4% among enterprise merchants, Chargebacks911 said.
“Friendly fraud has moved from being a back-office inconvenience to a material business risk,” said Monica Eaton, founder and CEO of Chargebacks911, in a statement. “It is influencing pricing, customer policies, staffing decisions and the economics of digital commerce. The problem is growing faster than many merchants’ ability to identify, measure and manage it.”
Chargebacks, friendly fraud and AI
The 2026 Chargeback Field Report found that more than 61% of such returns have increased over the past three years. 38% of respondents said the costs of chargebacks have influenced the prices of their goods and services. That’s an increase from 32.5% the prior year.
Those costs can include:
- Merchandise
- Lost transaction revenue
- Chargeback fees
- Fraud-prevention expenses
- Labor to investigate and respond to disputes
“Chargebacks rarely cost merchants only the value of the original transaction,” Eaton said. “Once all factors are considered, the financial impact can multiply quickly and honest customers ultimately absorb part of that burden through higher prices or stricter policies. Refund abuse adds even more pressure by exploiting the customer-friendly processes merchants put in place to prevent disputes.”
The Chargebacks911 report also included analysis on AI, as well as buy now, pay later (BNPL) transactions.
More than a quarter of merchants (26.7%) said they currently use AI-based fraud-prevention tools. Meanwhile, more than a third (37%) plan to adopt them, Chargebacks911 found.
And nearly a fifth (19.1%) of merchants surveyed in the report accept BNL payments. However, about 40% believe BNPL can increase their exposure to chargebacks.
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