Chargebacks911 report reveals USD $170 billion hit from fraud

Chargebacks911 has released its 2025 Cardholder Dispute Index, providing detailed analysis of why consumers are initiating transaction disputes and what this means for merchants and financial institutions.

The study draws on a survey of over 1,200 cardholders in the United States and United Kingdom, examining trends in payment preferences, dispute behaviours, and the dynamics between banks, merchants and cardholders. Findings indicate a sustained rise in the misuse of chargebacks, which, according to Visa, may constitute up to 75% of all chargebacks. Contributing factors include consumer convenience, confusion, and evolving expectations.

Monica Eaton, Chief Executive Officer of Chargebacks911, described the objectives and implications of the new report. She said, "This report is about pulling back the curtain on customer behaviour. It gives merchants a unique window into the decision-making process behind transaction disputes. With this knowledge, businesses can adapt their practices to prevent chargebacks, enhance transparency, and ultimately improve customer satisfaction all while protecting their bottom line from unnecessary losses."

Financial impact

The company estimates that chargeback fraud and misuse cost merchants more than USD $170 billion annually in the United States alone, underscoring the significant economic implications for businesses engaging in digital commerce. As eCommerce continues to evolve, the ability to manage these risks remains a critical operational concern.

Changing consumer behaviours

Key findings from the 2025 Cardholder Dispute Index highlight the consumer preference for convenience, with 76% of respondents stating a preference to resolve disputes via their bank. Nearly half of surveyed cardholders reported bypassing merchants entirely when initiating disputes.

The survey reports that consumer trust in financial institutions remains high, with 89% of consumers expressing confidence in their bank's dispute resolution process. Furthermore, 88% of respondents indicated that a successful dispute increases the likelihood they will file another in the future, reinforcing a pattern of relying on banks rather than merchants for issue resolution.

Younger consumers, particularly those under 30, are more likely to adopt digital-first behaviours. They are more than twice as likely to prefer mobile wallets compared to those over 60, and also lead in the use of Buy Now, Pay Later (BNPL) services and free trials, both of which are associated with elevated rates of disputes.

The clarity of billing descriptors also emerged as a concern. Forty percent of respondents reported that unclear or incomplete billing descriptors often cause confusion, resulting in them not recognising purchases on their statements. This confusion contributes to the prevalence of 'friendly fraud,' where legitimate purchases are disputed due to a lack of clarity.

Opportunities for merchants

Despite the majority of consumers defaulting to banks for dispute resolution, the report identifies a significant segment that continues to engage with merchants. This presents a retention opportunity for merchants willing to invest in improved communication, transparent terms, and more accessible refund mechanisms.

The report summarises an environment in which consumers are becoming more digital, demanding convenience and leveraging robust dispute tools offered by banks. The trend towards repeated satisfaction with bank-mediated outcomes further strengthens customer loyalty to financial institutions, rather than merchants themselves.

According to the experts at Chargebacks911, this presents both a warning and an opportunity for merchants: if they can't match the speed and simplicity of bank dispute processes, they risk becoming irrelevant in the eyes of their own customers. But by focusing on clarity, responsiveness, and proactive communication, merchants can retain control of the post-transaction experience - and reduce unnecessary chargebacks in the process.

The 2025 Cardholder Dispute Index complements Chargebacks911's annual Chargeback Field Report, providing combined perspectives from both consumers and merchants on the current chargeback environment. These resources are positioned to support industry stakeholders seeking to reduce disputes, enhance operational efficiency, and maintain strong customer relationships.