Friendly fraud chargebacks keep rising as more shoppers dispute purchases they made themselves. We asked merchants what cut their disputes in the past year, and their answers point to clearer records before any fight with the bank.

Card disputes are climbing on both sides of the Atlantic. Mastercard and Datos Insights forecast 261 million chargebacks worldwide in 2025, rising to 324 million by 2028. Meanwhile, Visa cut its merchant monitoring threshold to 1.5% on 1 April 2026. As a result, a seller with rising friendly fraud chargebacks now reaches the danger zone sooner. Most online merchants therefore need to decide which fix to try first.

We asked payments managers, fraud leads and merchants one question: how has your business cut chargebacks or first-party fraud in the past year, and what change made the biggest difference? We also asked for before-and-after numbers and tactical advice over vendor pitches. Three people answered, and we used all three. However, all three run merchant businesses rather than payment firms, and none shared hard figures. So we checked their claims against card network rules and industry data.

Friendly fraud chargebacks by the numbers

First, the scale. In Mastercard’s 2025 State of Chargebacks report, surveyed merchants classed 21% of their chargebacks as first-party fraud and 24% as third-party fraud. A further 38% had nothing to do with fraud. Issuers saw a different picture, labelling 72% of disputes as fraud against 45% for merchants.

Confusion drives much of the problem. Mastercard says 48% of consumers have disputed a charge they later realised was legitimate. Therefore, many friendly fraud chargebacks start with a shopper who simply does not recognise a payment. Spotting the difference between confusion and abuse is hard, as our look at where AI fraud models fail showed.

The cost of getting it wrong is steep. LexisNexis found US merchants incur $4.61 for every $1 of fraud, up 32% since 2022. In the UK, emerchantpay estimates consumers received £3.5 billion in friendly fraud refunds over 12 months. Also, every one of those friendly fraud chargebacks counts towards the ratios that card networks watch.

Written proof before production

Our first respondent runs a custom workwear business that sells branded uniforms to small teams.

Get customer approvals in writing. It will save you.

Merchants surveyed for Mastercard’s 2025 State of Chargebacks report classed 21% of their chargebacks as first-party fraud. Those disputes can come from buyer’s remorse or a problem with the product.

Everything we sell at Arklavo is custom, so written customer approval of each order helps enormously when a chargeback lands. Every order gets a free digital proof, and nothing is made until the customer approves the final version. One of our reviewers even mentioned it. If a customer files a chargeback saying the item wasn’t what they ordered, we pull up the proof we sent and show that they approved it.

Our custom items are final sale, with a remedy process for manufacturing defects or items made incorrectly. Because we state the final sale policy at checkout, we head off chargebacks from customers who assumed they could return the product for any reason. Our returns and remedies page also feeds our website chat, so a customer who asks about returns before buying gets accurate information we can hold them to later.

My advice to other small merchants: keep every approval, proof and delivery confirmation, so you aren’t scrambling to find it when a chargeback arrives. It will save you a lot of time.

Conor Smart, Managing Director, Arklavo

The proof step checks out. Arklavo’s product pages say every order includes a free digital proof and nothing goes into production before approval. That record helps most with friendly fraud chargebacks filed as “not as described”, where a merchant must show what the buyer agreed to. However, a signed proof does little against a claim that someone used the card without permission. We also corrected the figure in his answer. The Mastercard survey covered 840 merchants in the US, UK, Brazil and Australia, so it is not a worldwide count. Arklavo is a clothing merchant rather than a fintech, but its experience fits the question.

Clear expectations after the sale

Our second respondent co-owns a promotional products maker in Bend, Oregon, that has made custom coins, pins and patches since 1989.

In custom merchandise, a lot of disputes come from a gap between what the buyer pictured and what they received, rather than bad intent. The change that matters most for us is a clear proofing step before production, where the customer approves the design, size, colours and details in writing before anything gets made. Once a buyer has signed off on exactly what they are getting, there is far less room for a “not as described” claim later. If a question does come up, we have a clear record to point back to.

The other piece is setting expectations early on turnaround and shipping. Many friendly disputes start when a customer feels left in the dark, so steady updates after the sale stop a simple question from turning into a chargeback.

Eric Turney, President and Sales and Marketing Director, The Monterey Company

Eric’s two points match the networks’ own advice. In the same report, Mastercard says a clear merchant name, logo or itemised receipt can cut disputes caused by transaction confusion. Similarly, shipping updates head off friendly fraud chargebacks by giving buyers an answer before they phone their bank. Still, like Arklavo, The Monterey Company shared no before-and-after numbers. Readers should treat both answers as sound practice rather than measured results. It is a manufacturer, not a fintech.

Recognisable charges and faster refunds

Our third respondent co-founded an AI video platform that sells credits to creators, a digital goods model that draws frequent disputes.

I’m Runbo Li, co-founder and CEO of Magic Hour, an AI video platform with millions of users that David Hu and I built as a two-person team.

Friendly fraud nearly sank us in our first year. We sell AI video credits, which puts us in a high-risk category for chargebacks. People would generate 50 videos, then dispute the charge, saying they “didn’t recognise it”. At our worst point, our chargeback rate threatened our ability to process payments at all.

The biggest change was simple: we rewrote our billing descriptor. The old one was so generic that people didn’t recognise the charge on their statement. We changed it to something clearly tied to our product name and added a short URL. That alone cut a meaningful share of disputes, because many “friendly fraud” cases are just confused customers who forgot what they signed up for.

Second, we built an automated refund flow that’s faster than filing a dispute. If someone can get a refund in 30 seconds, they have no reason to call their bank. We added clear cancellation prompts, instant confirmation emails and outreach when usage suggested someone might leave. Most people who would have disputed now refund themselves. That costs us the revenue but saves the chargeback fee, the penalty and the hit to our ratio.

Third, we started flagging accounts that use a lot of credits right before disputing. Simple internal tooling matches usage spikes with dispute timing. When we spot the pattern, we block those accounts and submit evidence packages with full usage logs, IP data and timestamps. Our win rate on representments rose sharply once we treated evidence as a real process.

The lesson: most of our chargeback problems came from poor communication and friction. Make the charge recognisable, make refunds easier than disputes, and save your fight for the real bad actors.

Runbo Li, Co-founder and CEO, Magic Hour

Runbo’s descriptor fix has strong backing. Stripe’s statement descriptor guidance says clear and accurate descriptors can reduce chargebacks and disputes. In addition, his evidence work maps to Visa’s Compelling Evidence 3.0 rules, which let merchants answer a reason code 10.4 fraud claim with two earlier undisputed transactions. His user claim also holds, since Magic Hour’s site cites more than 4.9 million creators. Still, digital goods are not the riskiest sector. Mastercard’s data shows gaming, gambling and crypto merchants report the highest share of fraudulent chargebacks. Magic Hour is not a fintech, and it gave no figures, so we cannot size its gains.

What to watch next

Next, watch how acquirers apply Visa’s VAMP thresholds. Since April, merchants in the US, Europe and most regions reach the Excessive level at a 1.5% ratio with at least 1,500 counted events. Mastercard flags merchants at 100 chargebacks and a 1.5% ratio in a month. In addition, Mastercard says its Ethoca Alerts prevented more than 39 million chargebacks in 2025, so expect wider use of pre-dispute alerts. The networks are also selling more fraud tools, as Visa’s A2A Protect upgrade shows. Meanwhile, Chargebacks911’s 2026 field report found merchants estimate friendly fraud at 43.8% of their chargebacks, far above the Mastercard figure. Measurement clearly still varies.

Above all, our respondents agree on one lesson. Friendly fraud chargebacks usually begin with a buyer who does not recognise a charge or remember what they approved. Therefore, the cheapest fix comes before any dispute: a clear descriptor, a signed-off proof, regular updates and a refund that is easier than calling the bank.

FintechBits covers payments, banking and fintech developments for readers in the US and UK. This article is for information only and is not financial or legal advice. Views expressed are those of the FintechBits editorial team.