Reviewed by Mayer Hyman, Payments Specialist | Reviewed for accuracy July 2026
Key Takeaways
- Merchants identify 45% of their chargebacks as fraudulent, spanning both criminal fraud and customer-side “friendly fraud” (Ethoca 2025 State of Chargebacks Report).
- The three biggest ecommerce fraud risks are chargeback fraud, friendly fraud, and buy online/pick up in-store (BOPIS) fraud, each with distinct prevention tactics.
- Clear return policies, delivery confirmation, and customer signature requirements meaningfully reduce disputable transactions before they become chargebacks.
- Dispute-alert tools like Verifi and Ethoca let merchants resolve disputes directly with customers, often without the chargeback ever reaching the card issuer.
Why eCommerce Fraud Management Matters
The three biggest ecommerce fraud risks are chargeback fraud, friendly fraud, and buy online/pick up in-store (BOPIS) fraud, and each requires its own prevention approach. It’s not realistic to eliminate every instance of fraud, but following a few solid fraud management practices goes a long way toward protecting your business, whether you’re just starting an online business or you’re already an ecommerce veteran.
Merchants identify 45% of their chargebacks as fraudulent, according to Mastercard-owned dispute network Ethoca’s 2025 State of Chargebacks Report (Ethoca, 2025). That’s nearly half of all disputes tied to some form of fraud rather than a genuine service issue, which makes prevention practices worth the investment. Here’s what you need to know about the main types of ecommerce fraud, and how to reduce your exposure to each.
Chargeback Fraud
Keeping track of chargebacks is essential if you want to avoid losing your merchant account. To prevent chargeback fraud, you need a strong quality control system and good records of every customer interaction. Chargeback fraud can add up and get expensive, but there are several things you can do to reduce it.
Provide Clear Return and Exchange Information
Make sure your return policies are clear so there’s no confusion about what can and cannot be returned, how long the customer has to return an item, and how your exchange process works.
Keep Track of Postal Deliveries
A lot of chargeback fraud happens when a customer claims they never received a package. Check whether a customer frequently changes their mailing or billing address, since that can be a red flag. You may also want to use delivery photo confirmation or signature tracking to prove a customer actually received an item.
Watch for Organized Retail Crime Patterns
Organized crime rings order large amounts of merchandise using stolen identities to resell at a profit. Not every large multi-item order is fraudulent, of course, but recognizing this pattern can help you flag suspicious purchases before they ship.
Friendly Fraud
Friendly fraud happens when a customer receives what they ordered, decides they don’t want it or forgets making the purchase, and files a chargeback instead of requesting a refund. These chargebacks are costly, because on top of refunding the transaction, you can lose revenue on a legitimate sale and still pay dispute fees.
Maintain Good Relationships With Customers
You can’t stop customers from making claims, but you can make it easy for them to resolve issues honestly instead. Providing an easy-to-reach customer service team, whether by phone, email, or chat, gives customers a way to fix mistakes before they escalate into disputes.
Automate Recurring Payments to Reduce Errors
Automated recurring payments reduce the chance of entry errors that lead to confused customers and surprise chargebacks. Sending confirmation emails or text alerts for large purchases also gives customers a chance to review their order before it ships, which prevents a share of avoidable disputes.
Require Signature Confirmation for Shipped Orders
When the recipient signs the delivery receipt, it creates a paper trail. That reduces friendly fraud and lets you resolve a dispute directly with the customer without involving the card issuer.
Buy Online/Pick Up In-Store (BOPIS) Fraud
Clear pickup rules, a tight return policy, and ID checks at pickup are what reduce BOPIS fraud risk. Many customers consider online shopping safer than an in-person store, but fraudsters still find ways to exploit BOPIS.
Set Clear Expectations at Checkout
Be clear about pickup location, timing, and identification requirements, and emphasize these during the checkout process.
Spell Out Your Return Policy
Reducing the return window and clearly marking non-returnable items lowers the chance of fraudsters trying to return goods that shouldn’t be eligible.
Require ID at Pickup
Requiring identification from the person picking up a purchase isn’t legally required, but it confirms the person collecting the item is actually the customer.
Fight eCommerce Fraud With the Right Tools
Having the right tools in place goes a long way toward keeping your business safe. Verifi, a Visa solution, offers real-time dispute resolution and works as an intermediary to help merchants resolve disputes directly with customers using strong authentication protocols.
Ethoca Alerts, the Mastercard solution, uses cardholder dispute information and confirmed fraud data gathered from a large network of issuing banks, letting issuers and merchants exchange data in real time. Because the system sends large volumes of chargeback alerts to merchants, merchants can often refund customers without going through a formal dispute process, which also means the acquiring bank isn’t notified.
When you partner with Cartis Payments as your merchant services provider, you get access to both Verifi and Ethoca Alerts as part of a broader suite of fraud prevention tools. No matter which kind of ecommerce fraud threatens your business, having these practices and tools in place puts you in a stronger position to catch it early.
FAQ
What percentage of chargebacks are actually fraud?
Merchants identify 45% of their chargebacks as fraudulent, according to Ethoca’s 2025 State of Chargebacks Report, spanning both criminal fraud and disputes where the cardholder made the purchase but disputes it anyway.
What’s the difference between chargeback fraud and friendly fraud?
Chargeback fraud typically involves a bad actor exploiting the dispute process deliberately, for example using a stolen card or falsely claiming non-delivery. Friendly fraud happens when a legitimate customer disputes a charge instead of requesting a refund or contacting the merchant, often without malicious intent.
Do tools like Verifi and Ethoca replace the need for good fraud management practices?
No. Dispute-alert tools work best alongside strong practices like clear return policies, delivery confirmation, and responsive customer service. The tools catch and resolve disputes faster, but reducing avoidable disputes in the first place still depends on how the business operates.
