DIY Chargeback Management is Falling Short, New Study Shows

Across the board, invalid chargeback issuances are on the rise. According to new data published in the 2026 Chargeback Field Report, 73.7% of merchants recorded an increase in first-party misuse of the chargeback process — often referred to as “friendly fraud” — over the last three years.

Several factors are to blame here. One is that the chargeback process puts merchants at a structural disadvantage. Issuers have an incentive to placate consumers, so they make it easy for cardholders to dispute charges; it often just takes two clicks in one’s banking app to initiate a chargeback. The burden of proof is then on the merchant to show the cardholder’s claim is false.

There are other factors, too. Inflation, overspending, and the legitimization of chargeback misuse by online influencers are partly to blame. The proliferation of professionalized “fraud-as-a-service (FaaS)” schemes, too.

The common denominator across small, mid-market, and enterprise merchants is that they’re all fighting an uphill battle against rising dispute volumes. Many, however, are stretched thin. Only about 34% of merchants surveyed say they have internal chargeback personnel on payroll. Fewer than one in three say they manage chargebacks with third-party support of any kind.

Putting Chargeback Management on the Back Burner

Most sellers default to a do-it-yourself approach, where chargeback management falls under the purview of a broader function, such as finance, accounting, operations, or customer service. This is, unfortunately, a flawed approach.

16.3% of merchants say they entrust chargeback management to a loss prevention department. Half say that chargeback management lives with a team that has a much more general focus; accounting and finance (15.5%), operations (15.5%), client relations and customer service (7.8%), and so on.

Delegating dispute management to staff that are not specialists in this area can cause problems. They don’t have the expertise necessary to be effective in this role. The rules governing chargeback management differ from one card network to the next; Visa and Mastercard have different procedures, different time limits, different reason codes, and so on. And, these rules are subject to change at any time, meaning they demand constant and ongoing review.

The biggest problem with lumping dispute management in with generalist tasks, however, is that it risks being relegated to the back burner.

Say that your customer service team is evaluated based on indicators like average resolution time and net promoter scores. Metrics that matter for chargeback management — representment rate, win rate, net recovery rate — all these get relegated. Accountability wanes and outcomes falter without dedicated ownership.

There’s also the problem of strategically deploying tools in a coordinated manner. To aid with DIY dispute management, merchants end up relying on a hodgepodge of different tools. Nearly two-thirds of respondents say they use three or more chargeback management tools, while 23.5% say they juggle five or more tools.

Needless to say, managing a fragmented set of solutions, which are not necessarily calibrated to complement one another as well as they could, can lead to operational bottlenecks. This would make chargebacks more costly, and labor-intensive to manage, which may force merchants to become more discerning about submitting a dispute response. Chargebacks that could be won will end up being left on the table.

Poor integration can also lead to data incoherence. This raises the risk that disputes fall through the cracks and may cause merchants of all sizes to forfeit revenue that could otherwise be recovered.

How Merchants Can Succeed at Chargeback Management

By now, we’ve established that a DIY approach that relies on unclear ownership and disjointed tool stacks sets merchants up for poor outcomes. While it’s true that this method is affordable, sellers also risk getting what they pay for: next to nothing.

This lies in contrast to hiring dedicated in-house chargeback analysts or outsourcing dispute management to third-party professionals. While both approaches are costly, a myopic focus on payroll costs or vendor fees obscures what actually matters: maximizing ROI and reclaiming as much revenue as possible.

Consider What DIY is Really Costing You

Before investing resources into hiring a chargeback team or onboarding a third-party vendor, I suggest that merchants consider the fully-burdened explicit cost, as well as the opportunity cost, of sticking to a DIY strategy.

In terms of explicit costs, that means tallying the labor costs involved in dispute management. If a customer service specialist that gets paid $75,000 a year spends 10% of their time preparing chargeback responses, then that’s $7,500 a year that should be added to the denominator of your ROI calculation.

Then, consider opportunity costs. What else could that person be doing aside from chargeback management? What is the highest and best use of their time? If chargeback management is not within the staff member’s circle of competence, it’s likely not the most optimal use of their time.

Audit Your Tech Stack

Next, take a closer look at the tools you’re using, how you’re using them, and whether you need them at all. As mentioned earlier, a fragmented stack can hamper recovery efforts, so try to prune functional overlap before adding another tool.

In a similar vein, consider how tightly these tools can be integrated, and aim for four-way syncing when possible. When necessary, deploy middleware to improve connectivity and ensure that representment evidence and data are preserved across systems.

Invest in Chargeback Automation

Consider how to reduce rote human labor, like manual data entry tasks. Merchants should still keep humans in the loop for complex friendly fraud disputes or edge cases that require expertise and judgment. But, routine and predictable tasks can — and should — be automated.

Tools that automate evidence collection, response submission, or timeline tracking, can likewise streamline workflows and improve ROI, even in cases where human input is required.

Evaluate All Options

Now that you have your house in order, determine what kind of expertise you need. An in-house analyst or chargeback manager can adapt their expertise to your customer base and internal policies. But, do you have the bandwidth to build and support an internal team?

Third-party vendors will have access to cross-industry intelligence and sophisticated technologies unavailable to in-house personnel. Growing mid-market merchants and established enterprise merchants may find that a hybrid model works best. In practice, that could mean hiring one or two in-house chargeback professionals to manage strategy while leveraging one or more external vendors to handle execution of key operations.

One way or another, merchants will need to onboard dedicated experts who can offer the specialized attention that chargeback management calls for. Whether that means building an in-house team, retaining a third-party vendor, or taking a hybrid approach, the goal is the same: an effective, ROI-positive dispute management strategy that helps protect and recover revenue.