Hey everyone,

Welcome back for another bite to chew on.

Every DTC founder knows the gut punch of a chargeback: you lose the product, the revenue, and the customer. 

But here’s what most don’t realize: merchants are losing over $125 billion every year not just to stolen credit cards but to digital shoplifting like friendly fraud, return abuse, and disputes they don’t have the time to fight.

It is one of the least talked-about margin killers in eCommerce. And while most fraud tools promise protection, they are stuck fighting yesterday’s battles.

Today we’ll break down what founders should really be watching for, and how to fight it before it quietly bleeds your business dry.

🍽️ On the Menu:

For years, fraud prevention has meant one thing: stopping stolen credit cards at checkout. 

That made sense in the early days of eCommerce. Fraudsters bought products with stolen numbers, merchants lost money, and banks demanded better defenses.

But now in 2025, most prevention tools are still locked into that old framework. They sit at checkout, flag “risky” transactions, and block them before they’re approved. 

Sounds good on paper. Except in practice, this approach does as much harm as good.

False declines are the dirty secret of traditional fraud systems. They reject legitimate customers who just happen to trip the wrong signal. 

Maybe they’re ordering from a new address, maybe they’re traveling, maybe they’re buying a high-ticket item. The sale gets blocked, the customer feels insulted, and your conversion rate quietly erodes.

The net result is a lose-lose situation: yes, you might block some bad actors, but you’re also turning away real customers who were ready to buy. 

For operators who live and die by blended ROAS, that’s a brutal tradeoff.

The better approach is to think beyond the transaction itself. Fraud is not just about risky payments. It’s about the identity behind them. 

Platforms like Chargeflow Prevent focus on people instead of single transactions. They approve payments up front to keep conversion rates high, then run identity checks post-purchase to flag suspicious behavior before it turns into a chargeback.

The takeaway: if your fraud prevention strategy is still based on “block at checkout,” you’re playing by an outdated rulebook. 

The goal isn’t just to stop fraud, it’s to protect sales while you do it.

Today, the fastest-growing threat to DTC is not stolen credit cards, it’s customers themselves.

That might sound harsh, but ask any operator who has dealt with “friendly fraud.” 

A customer receives their order, then disputes the charge with their bank claiming it never arrived. Or they buy a product, use it, and request a refund under false pretenses. Or worse, they order, wear, and return (the infamous “wardrobing” play).

On paper, these look like customer service issues. In reality, they’re fraud. And they’re growing faster than traditional fraud. 

Industry estimates peg friendly fraud and return abuse as the biggest drivers of the $125B annual loss.

Why does this happen? 

No matter how hard you try, you can’t eliminate abuse completely. But you can reduce exposure:

All of these help. The key is creating enough friction to deter abusers without punishing legitimate customers.

The real shift, though, comes from treating this problem as an identity issue, not a transaction issue. 

Someone who repeatedly disputes charges across multiple brands isn’t a “misunderstood customer.” They’re a known abuser. 

Chargeflow Prevent tackles this by analyzing billions of data points across a network of 15,000 merchants. Every dispute in that network makes the system smarter for everyone else. For a founder, that’s the kind of collective defense you can’t build on your own.

Treating these cases like customer service problems is what lets them multiply. Until founders call them what they are (fraud) they’ll keep bleeding margin in plain sight.

You don’t see the damage on a P&L until you zoom out, but it’s there. And if you’re not tracking it, you’re paying for it.

But solving it takes more than checkout declines. It takes a system that protects conversion upfront and stops fraud before it becomes a chargeback.

That’s what Chargeflow’s Prevent was designed for.  

Instead of judging a single payment, it scores the identity behind every purchase using billions of data points across a network of 15,000+ merchants. That means:

Fraud doesn’t have to be a growth tax anymore.

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Even if you tighten policies and adopt smarter prevention, disputes will still happen. And when they do, they bring a second layer of pain: operational overhead.

Ask anyone who has manually fought a chargeback. The process is tedious and unrewarding. 

You dig up order confirmations, shipping logs, and customer communications. You stitch them together into a “compelling evidence” packet. 

Then you wait weeks for a verdict that often goes against you anyway.

Merchants lose these cases because the submission is weak or the team simply didn’t have time to build a strong case. 

For a lean DTC brand, spending hours on disputes means ignoring higher-leverage work. For a scaled brand, it means tying up ops, finance, and support staff on low-value tasks.

This is the hidden cost of fraud. It’s not just the chargeback itself. It’s the time you and your team spend chasing it. 

And it adds up faster than most founders realize.

The best operators know that automation is the only sustainable answer. 

You need systems that can automatically collect the right evidence, submit it on time, and update workflows without constant human oversight. 

Fraud costs more than the disputed transaction. It costs your team’s time, energy, and focus. Protecting your operators is just as important as protecting your revenue.