TL;DR Summary:
The Alert: New data reveals a startling 233% increase in retail e-commerce chargebacks between Q1 and Q3 of 2025.
The Cause: It’s not just error; it’s intent. A rise in “refund hack” tutorials on social media and economic pressure has led 1-in-5 consumers to justify filing false claims.
The Risk: Beyond lost revenue, 62% of customers will stop shopping with a brand after experiencing fraud issues.
The Solution: You need a defensive strategy that combines strict dispute management with clear customer communication. (See our guide on the “Holiday Hangover” for specific tactics).
If your dispute notifications felt more frequent this year, you weren’t imagining it. You were experiencing a historic shift in consumer behavior.
For years, merchants have battled “friendly fraud”—where customers dispute legitimate charges. But new data released this week confirms that 2025 has turned friendly fraud from a nuisance into a massive operational threat.
According to the newly released Sift Q4 2025 Digital Trust Index (via Chain Store Age), retail e-commerce chargebacks didn’t just rise; they exploded.
The Hard Data: A Year of Escalation
The numbers paint a stark picture for online retailers. While chargeback rates across all industries climbed steadily, the retail sector took the hardest hit:
- The Surge: Retail e-commerce chargebacks grew by a staggering 233% between Q1 and Q3 of 2025.
- The Peak: The overall chargeback rate hit 0.26% in the third quarter—a 53% jump from the start of the year.
- The Targets: Not all verticals were hit equally. The most disputed categories were Clothing, Accessories, and Cosmetics (20%), followed closely by Digital Subscriptions (18%) and Home Goods (16%).
The “Refund Hack”: Why Is This Happening?
Why the sudden explosion? The report points to a troubling intersection of social media influence and economic justification.
- The “Viral” Fraudster
Social media has democratized fraud. The report found that 10% of consumers admitted to trying tactics learned from “refund hack” tutorials found on social platforms. These videos teach average consumers how to manipulate return policies, return worn clothing, or file chargebacks for items they received and kept.
- The Moral Justification
Fraud is no longer seen as a crime by many; it is seen as a “consumer right.”
- 18% justified false claims because an order arrived late.
- 17% felt the retailer “behaved unethically,” making the fraud “fair game.”
- 12% simply admitted they wanted their money back and knew the bank would cover it.
- Economic Pressure
Financial hardship is a major driver. One-in-five respondents said they are more likely to commit this type of first-party fraud during tough financial times.
The Hidden Cost: Lost Trust
The cost isn’t just the chargeback fee or the lost inventory. The real cost is your customer base.
When fraud enters your ecosystem, it hurts the customer experience for everyone. The study found that 62% of consumers would shop less—or stop entirely—with a brand after experiencing fraud-related friction. Furthermore, those who file disputes often become victims themselves; 24% of dispute filers subsequently fell victim to additional online fraud.
Your Defense Strategy: From Reactive to Proactive
This data serves as a wake-up call. You cannot rely on passive payment processing in a landscape where 233% increases are the norm. You need a partner that acts as a shield.
At Payscout, we believe in empowering merchants with the tools to stop this “leakage” before it drains your bottom line.
- Know Your Sector Risks
If you sell clothing or cosmetics, you are in the crosshairs (19% of first-party fraud targeted clothing specifically). You need tighter return policies and clearer tracking evidence for these SKUs.
- Fight the “Holiday Hangover”
As we approach the end of the year, this 2025 surge is likely to compound with the traditional January dispute spike.
For a specific, step-by-step guide on how to inoculate your business against the upcoming January rush, read our recent article: The Holiday Hangover: How to Inoculate Your Business Against January Chargebacks.
- Leverage an MBE Partner
In a climate where consumers justify fraud because they feel retailers are “unethical,” your brand reputation matters. Partnering with a purpose-driven, MBE-certified company like Payscout signals to your customers (and the market) that you are committed to ethical, community-focused business practices.
Don’t let the 2025 surge become your 2026 baseline. Contact Payscout today to audit your fraud defense settings.
Sources Cited
- Sift Q4 2025 Digital Trust Index
- Chain Store Age: “EXCLUSIVE: Why chargeback rates are soaring” (Berthiaume, Dec 2025)
