Chargeback Fraud Statistics UK Businesses Should Know in 2026

A chargeback occurs when a cardholder contacts their card issuer to dispute a transaction and get their money back, rather than contacting the business they patronised for a refund. Sometimes, customers can wrongfully use a chargeback to avoid paying, a practice known as chargeback fraud.

Regardless of whether fraud is involved, chargebacks can negatively impact your business financially, since you’ll lose out on merchandise or services, and you’ll also usually have to pay a chargeback fee. Plus, after too many chargebacks, your business can be deemed a high-risk merchant account by your payment provider, resulting in higher fees or termination of services.

To better protect your business, we break down the most important chargeback fraud statistics.

What is Chargeback Fraud?

Commonly known as friendly fraud, chargeback fraud is when a consumer attempts to initiate a chargeback process under fraudulent claims.

Instead of contacting the merchant directly to request a refund, the consumer will contact their card issuer and falsely claim that the product was defective, wasn’t delivered, or that they didn’t authorise the transaction.

Top Chargeback Fraud Statistics

1. On average, chargebacks impact 6 in 1,000 transactions.
2. A 1% chargeback-to-transaction ratio is the maximum acceptable ratio for payment processors.
3. 72% of cardholders believe chargebacks and refunds are the same.
4. The financial impact of chargebacks is expected to grow from $33.79 billion in 2025 up to $41.69 billion by 2028, a massive 23% increase.
5. The average chargeback rate increased by 53% in Q3 2025 vs Q1 2025.
6. 75-86% of chargebacks are probable cases of ‘friendly fraud (i.e. chargeback fraud).
7. 59% of ecommerce businesses say online payment fraud is increasing.
8. Merchants have a relatively low chargeback success rate, winning only 20-30% of disputes.

Chargeback Fraud Statistics by Industry

Source: ClearPayments.com

What puts an industry at high risk of chargebacks?

When an industry or business type experiences a high chargeback ratio, it tends to get labelled by the banks as ‘high risk’. These are enterprises earmarked as being easy targets for fraudsters, and – in addition to the above – include:

• Online pharmaceuticals
• Adult entertainment
• Dating services
• Retail
• Online gambling
• Jewellery
• Legal and financial services

In general, merchants who handle card-not-present transactions (selling online via links or QR codes) are at higher risk of chargeback fraud and experience the highest chargeback rates. Also, a lot of high-risk industries operate on a subscription model

“In e-Commerce and subscription-based businesses, I frequently notice spikes in chargebacks just after price adjustments, free trial conversions (when people usually forget to cancel), and heavy marketing campaigns,” said Azimul Hoque, an ACCA-qualified accountant and Chartered Financial Analyst (CFA). “Mostly chargebacks happen when customers struggle to contact support or track their orders, and have discrepancies between product descriptions and what they get.”

If you’re a merchant operating in one of the aforementioned industries, chances are high that you’ll need to secure the services of a merchant account that specialises in catering to risky businesses.

For our top picks, explore Expert Market’s guide to the best high-risk merchant accounts.

Consumer Chargeback Statistics

Here are a few consumer chargeback statistics to learn more about how customers influence rates of chargebacks:

• 1 in 9 consumers who win a chargeback claim will initiate another one. This is why it’s important to prevent this process from occurring and, instead, initiate a refund if there is a genuine problem with the customer’s order or service.
• Under 50% of customers will directly complain to the merchant if there’s an issue with their order, leaving you more vulnerable to fraudulent chargebacks.
• 72% of customers have said that ‘convenience’ has driven them to file a chargeback claim.
• 30% of chargebacks result from transactions made with a stolen card.
• 52% of customers fail to contact merchants about issues and just file chargebacks instead.
• 84% of customers find filing chargebacks easier than requesting a refund.

Customer’s role in chargebacks

Chargebacks exist to protect customers and merchants from fraudulent activity and mistakes, and most chargebacks occur when a customer disputes a transaction on their bank account.

They will then ask their bank to return the funds from the transaction in question. The bank will then carry out an investigation. This procedure should provide the merchant with a level of protection against fraudulent chargebacks.
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Chargebacks should only be processed once it can be proven that a transaction occurred due to a mistake, unfairness, or fraud.

Instances that warrant a chargeback include:

• A consumer never received the product or service.
• A purchase was made with a stolen card.
• A card machine or online payment portal caused an accidental transaction.
• The merchant accidentally overcharged the consumer.

Chargebacks can be processed through a payment processor for credit and debit cards, and there is typically a 120-day window from the transaction for the cardholder to dispute the charge. This period may vary depending on the payment provider or payment method.

Chargeback Trends Statistics

Almost 57% of chargeback managers have reported seeing chargebacks increasing year on year. Not only that, in Q3 2024, dispute rates grew by 78% year over year. This is largely attributed to the rise in online shopping and services.

And, with the ease of setting up businesses even more prevalent now, thanks to social media and e-commerce platforms, it’s much easier for fraudulent consumers to carry out chargeback fraud on small businesses or businesses that might not have as many protective measures in place.

3 chargeback trends to expect in 2026

Here are a few major chargeback trends you should expect to encounter in 2026.

Chargeback fraud becomes more sophisticated

“Chargeback fraud is becoming more sophisticated because consumers now understand the system better than ever,” said Hoque, adding that financial institutions are a big reason for this shift. “Banks and credit card companies have made the dispute process very easy and have unintentionally trained customers to use chargebacks as an alternative for a no-refund policy.”

The growing presence of AI

“AI-generated documentation will also make it harder to validate genuine disputes,” said Hoque. Because AI is now capable of generating conversations, sample documents, and other materials that may support a customer’s chargeback, it may be harder for merchants to spot real, legitimate disputes from those that are completely made up.

However, while AI may be used by fraudsters to enhance their efforts, it also plays a role in reducing fraud. For example, more than 50% of retailers are using AI and machine learning systems to spot and identify signs of fraud and catch the perpetrators.

Social media driving chargeback fraud growth

According to statistics, 27% of consumers are exposed to chargeback fraud promotion on social media. via posts and videos that frame chargeback fraud as hacks and strategies to essentially get free money.

While all generations may be impacted, Gen Z are particularly susceptible; 47% of those exposed to this promotion are from Gen Z.

Also, “social media-driven businesses are especially vulnerable” to fraud, as “customers feel less loyalty and are more likely to dispute,” Hoque said.

The Cost of Chargebacks to Merchants

• Merchants can end up spending multiple times the cost of a disputed transaction; for instance, U.K. merchants typically spend 2.5X the transaction value on a chargeback.
• U.K. chargeback fees typically run £15-£25 per incident.
• Merchants typically spend between $100,000 and $500,000 on chargeback technology each year.
• Confusing billing descriptors cost U.K. merchants more than £128 million each year.
• Half of merchants handle chargebacks in-house, while 34% outsource them to a third party.

Merchant’s role in chargebacks

Once a chargeback process has begun, merchants have little to no control, whereas with a refund request, it’s often left to the merchant’s discretion. Here’s how the chargeback process works:

• Merchants receive a request for further details, which usually contains enough information for them to identify the disputed transaction.
• The merchant is then given a specific period to dispute the request.
• The merchant can appeal the chargeback by explaining their terms and conditions and showing a transaction and customer contact history. The more proof you give, the more likely it is that the appeal will go in their favour.
• If the appeal is unsuccessful or the merchant fails to respond, the funds will be debited from the merchant’s account and sent to the customer.
• The merchant may also need to pay a fee to cover the costs of processing the chargeback. Chargeback fees are usually between £15 and £25, but can reach £100+, and will be outlined by your payment provider when you first sign up.

If you’re a high-risk business, you might want to opt for a payment processor with low chargeback fees.

Disputing Chargebacks: Need-to-Know

Here are a few key points to bear in mind when disputing chargebacks:

• Build a dispute-readiness pipeline: Consistently maintain an evidence pack that contains order logs, IP/device data, delivery scans, customer relationship management (CRM) conversations, and checkout metadata. Having all of this information ready ensures you can respond quickly to disputes.
• Know the hierarchy of compelling evidence: Providing evidence is crucial when disputing chargebacks. However, not all evidence is created equally. For example, if you can provide GPS-verified delivery and a device match, it’ll carry a lot more weight than screenshots without timestamps or courier tracking alone. Providing lacklustre evidence may be why you’re losing disputes even though you feel you’ve offered enough proof.
• Beware of late-delivery claims: A customer might be unhappy that a product arrived later than the estimated delivery date, but that doesn’t constitute legitimate grounds for a chargeback. Despite this, many consumers still file claims for this reason. To avoid these incidents, provide clear communication about delivery times and status, or issue refunds promptly, rather than dealing with a chargeback.

Common Mistakes when Dealing with Chargebacks

Here are a few mistakes and pitfalls to avoid when dealing with chargeback claims:

1. Not being aware of the warning signs: Oftentimes, there are some signals that you may be at risk of chargebacks as a merchant. According to Hoque, if your company has received several failed payments, refund requests, or negative feedback, it may lead to a decrease in trust, which is a common precursor to fraud. Other red flags he noted include odd buying behaviour, rapid cycles of orders and refunds, or many large purchases from the same IP address or area.
2. Not using the right fraud protection tools and strategies: Catching fraud manually is difficult, so ensure you’re making use of techniques like fraud scoring (which uses AI to assign a risk level to each transaction) and monitoring behavioural analytics. Offering pre-billing reminders can also reduce fraud, as it lets customers cancel unwanted subscriptions before they’re charged, reducing the need for chargebacks.
3. Ignoring the 3DS2 protocol: The 3D Secure 2 (3DS2) protocol helps fight chargeback fraud by enhancing authentication. It provides richer data exchange (including device info, purchase history, location, and biometrics) to help protect merchants from fraudulent transactions. In fact, if a transaction is authenticated through 3DS2, the issuer takes responsibility for fraud-related chargeback disputes. Also, be aware of when liability shifts in general. While 3DS2 places liability on the issuer, if you use frictionless authentication or bypass it altogether, you remain exposed and at risk.