Friendly fraud—when cardholders dispute legitimate transactions—is escalating across retail. More than 73% of merchants who experienced a change in friendly fraud over the past three years reported it had worsened, rising to 83.4% among enterprise merchants (Digital Commerce 360 - AI). The Chargebacks911 2026 Chargeback Field Report found that 74.4% of retailers describe friendly fraud as a significant concern, with 38% saying chargeback costs have influenced their pricing strategies (Digital Commerce 360 - AI).
Merchants are turning to AI to mitigate damages. More than a quarter of merchants (26.7%) currently use AI-based fraud-prevention tools, while an additional 37% plan to adopt them (Digital Commerce 360 - AI). According to Chargebacks911 founder and CEO Monica Eaton, the problem is moving beyond back-office inconvenience into material business risk, influencing pricing, customer policies, staffing, and the economics of digital commerce itself.
The financial impact extends beyond transaction value alone—costs include merchandise loss, chargeback fees, fraud-prevention expenses, and labor for dispute investigation. More than 61% of returns have increased over three years, and honest customers ultimately absorb part of these costs through higher prices or stricter refund policies (Digital Commerce 360 - AI).