Finance

35% of Fraud Related Charges are Charge Backs

Updated 2026: Fraud related charge backs continue to be a major challenge for eCommerce businesses. Chargebacks occur when customers dispute transactions through their payment providers, often resulting in lost revenue, operational costs, and additional processing fees for merchants. As eCommerce transactions continue to grow, businesses must balance fraud prevention with positive customer experiences.

Wall Street Journal reports.

…customers contest a charge on their credit card, often claiming that the item was never delivered or they never bought it. 

While the statistics suggest that 35% of fraud-related charges are charge backs, it is important for small businesses to NOT go all out with strict return policies. Most of the small business owners that I have interacted with have strict return policies, but they are also open to returns beyond the return period if you can convince them of a genuine case. Small businesses, particularly brick and mortar small businesses, often thrive on the relationships they have with the customer community. It is important to keep that in mind while deciding on strict processes.

What Causes Chargebacks?

Chargebacks may occur for several reasons, including:

  • fraudulent transactions
  • stolen payment information
  • fulfillment delays
  • customer confusion
  • unauthorized purchases
  • disputes related to product quality or delivery

Even legitimate businesses can experience chargebacks when operational communication breaks down.

Fulfillment Problems Can Increase Chargebacks

Delayed shipments, inaccurate inventory availability, and missing tracking information often contribute to customer disputes and payment reversals.

Platforms like Ordoro help eCommerce businesses improve shipping visibility, inventory accuracy, and fulfillment workflows across multiple sales channels.

Why Chargeback Prevention Matters

Excessive chargebacks can:

  • increase payment processing fees
  • damage merchant account standing
  • reduce profitability
  • create operational overhead

Businesses that improve customer communication and operational reliability are often better positioned to reduce disputes.

FAQ Section

Frequently Asked Questions

What is a chargeback?
A chargeback occurs when a customer disputes a transaction and the payment provider reverses the charge.

What causes eCommerce chargebacks?
Fraud, shipping issues, fulfillment delays, and customer disputes commonly contribute to chargebacks.

How can eCommerce businesses reduce chargebacks?
Businesses can reduce chargebacks through better fraud prevention, accurate inventory visibility, reliable fulfillment, and clear customer communication.

Clear Return Policies Help Build Trust

Customers are more likely to dispute charges when return policies are confusing or difficult to find. Clear communication and responsive customer support can often prevent unnecessary chargebacks.

My advice is to establish a strict return policy that you can invoke when needed, but be flexible with specific situations.

Fraud related charge backs remain an important operational challenge for ecommerce businesses. Businesses that improve fulfillment reliability, inventory visibility, and customer communication are often better positioned to reduce disputes and maintain customer trust. To learn how eCommerce businesses streamline fulfillment operations, talk to an Ordoro expert today.

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