EXCLUSIVE: Why chargeback rates are soaring
Two key factors drove sharp growth in chargebacks throughout 2025.
Chargeback rates climbed steadily throughout 2025, reaching 0.26% in the third quarter, a 53% increase from the first quarter of 2025. Retail e-commerce chargeback grew explosively by 233% between the first and third quarters of the year., the highest increase of any merchant category.
The Sift “Q4 2025 Digital Trust Index,” exclusively released to Chain Store Age, indicates that 10% of surveyed consumers admitted they tried fraudulent tactics featured in “refund hack” tutorials on social media, such as returning worn clothing or filing chargebacks for purchases they received and were satisfied with.
Almost one-in-five (18%) respondents justified false claims because their order didn't arrive on time, while 17% felt that a retailer "behaved unethically" and a chargeback was justified. Twelve percent simply wanted their money back and knew their credit card company would cover the cost.
In addition, one-in-five respondents said they would be more likely to return worn clothing or file chargebacks for what were actually legitimate purchases during times of financial hardship.
The report also cites the expansion of card not present transactions, driven by continuing growth in digital commerce, as creating more opportunities for both legitimate and fraudulent chargebacks.
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Other findings
- Clothing, accessories, and cosmetics rank as the most disputed category for chargebacks at 20%, followed closely by digital subscriptions (18%) and home goods (16%). Among respondents who admitted to first-party fraud, 19% targeted clothing categories specifically.
- More than six-in-10 (62%) respondents said they would be less likely or would stop entirely shopping with a brand after experiencing fraud, with 21% saying they would stop completely.
- One-in-four (24%) respondents who filed a chargeback dispute due to fraud subsequently became victims of additional online fraud, which Sift analysis suggests means that compromised payment methods were not shut down quickly enough, leading to payment fraud (52%), scams (51%), and account takeover (29%).
"As disputes and chargebacks continue to rise, and first-party fraud becomes an increasingly significant part of overall dispute volume, businesses face growing operational and financial pressures," said Alexander Hall, Trust and Safety Architect at Sift. "Leveraging proactive fraud prevention and streamlined dispute management helps companies reduce losses, protect revenue, and maintain long-term customer trust."
