Refund and policy abuse displaced payment fraud as the top threat named by merchants in 2026, the first time that has happened since the Merchant Risk Council began tracking the category. The shift changes what "fraud prevention" should mean for most ecommerce stores.
First-party fraud, where the actual accountholder disputes a legitimate charge, jumped from 15% of reported fraud in 2023 to 36% in 2024, and the trend has continued into 2026, according to an analysis of the Merchant Risk Council's 2026 report. An increasing share of ecommerce loss now comes from a merchant's own customer base rather than external criminal actors.
Traditional fraud tools are built to catch stolen cards and fake identities, not a real customer misusing a real return policy. A shopper who buys a product, uses it, then requests a refund by claiming it never arrived looks identical to a legitimate complaint on most dashboards, until the pattern repeats across multiple orders.
Vague return policies invite disputes because there's nothing specific to point to when a claim doesn't add up. A policy that states exact timeframes, condition requirements, and evidence needed for a refund gives a merchant something concrete to enforce, and gives legitimate customers clarity that reduces accidental disputes. We cover the connection between checkout trust and policy clarity in how to reduce checkout abandonment caused by trust concerns.
A business with independently verified policies signals to both customers and payment processors that its return terms are real and consistently applied, not just posted text. This is one of the areas covered in ecommerce trust certification, alongside identity, security, and legal registration.
Welo Badge verifies that a business's stated policies match what it actually practices, as part of a review against the Welo Trust Standard. If policy-related disputes are becoming a bigger share of your losses, you can apply for Welo Badge and see what the review covers.
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