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10/07/2026 9:09 pm
TL;DR: Merchants are being pushed to distinguish true fraud, friendly fraud and non-fraud disputes because card-network reason codes often hide the real cause, and 60% of merchants have reported a rise in first-party misuse according to the Merchant Risk Council. Better classification improves both prevention and dispute recovery, because the control problem is evidence quality, not just fraud volume.
NHIMG editorial — based on content published by Signifyd: Friendly Fraud vs. Chargeback Fraud: Classification Guide (2026)
By the numbers:
- 60% of merchants have reported a rise in first-party misuse.
- 80% of identity breaches involved compromised non-human identities such as service accounts and API keys.
- 97% of NHIs carry excessive privileges, increasing unauthorised access and broadening the attack surface.
Questions worth separating out
Q: How should merchants classify chargebacks more accurately?
A: Merchants should classify chargebacks using their own evidence model, not the issuer reason code alone.
Q: Why do reason codes often fail to identify the real dispute type?
A: Reason codes are designed for issuer workflows, not merchant root-cause analysis.
Q: What do merchants get wrong about friendly fraud?
A: Many merchants treat friendly fraud as a single behaviour, when it can include accidental disputes and deliberate misuse.
Practitioner guidance
- Build a merchant-side dispute taxonomy Separate true fraud, first-party misuse and non-fraud disputes in your case management workflow, and require investigators to record the evidence used for each classification decision.
- Use corroborating identity and fulfilment signals Combine order history, device consistency, delivery confirmation, billing descriptor data and pre-dispute customer contact before deciding whether to challenge a chargeback.
- Tune escalation rules by dispute type Route suspected card theft cases toward authentication and anomaly review, while routing first-party misuse and service failures toward evidence collection and customer experience remediation.
What's in the full article
Signifyd's full article covers the operational detail this post intentionally leaves for the source:
- Signal-by-signal examples for distinguishing INR, SNAD and non-fraud disputes in live merchant workflows
- Practical examples of how to use tracking, order confirmation and customer contact history in case review
- Worked examples showing when customer service evidence should override a generic issuer reason code
- FAQ guidance on differentiating ATO from friendly fraud in ecommerce chargebacks
👉 Read Signifyd's classification guide for friendly fraud, true fraud and non-fraud disputes →
Chargeback classification gaps: what merchants need to act on?
Explore further
10/07/2026 9:33 pm
First-party misuse is an identity attribution problem, not just a payments problem. The article is right to separate intentional chargeback abuse from accidental customer confusion, because the operational question is who really initiated the dispute and why. That distinction depends on evidence quality, not on the bank's shorthand label. For identity and fraud teams, the practitioner conclusion is to treat dispute classification as an attribution control, not a back-office billing task.
A question worth separating out:
Q: Who is accountable when a chargeback is misclassified?
A: Accountability usually sits with the merchant organisation, because banks provide a reason code but do not build the merchant's internal classification system. Fraud, payments, customer service and fulfilment teams all share responsibility for supplying evidence, but the merchant must own the final root-cause decision and the resulting response.
👉 Read our full editorial: Chargeback misclassification is the real fraud risk in ecommerce
