Bad Customer Service Drives 85% of Consumers to Seek Chargebacks

For years, merchants treated fraud prevention like seasonal window dressing — a necessary expense to get through the holiday rush. But this year’s PYMNTS Intelligence-Worldpay Payments Optimization Tracker, “Securing the Season: Fighting Fraud Without Losing Customers,” shows that strategy no longer works. What began as a December problem has evolved into a structural one, where the same tools that keep criminals out also define how shoppers experience trust, speed and personalization all year long.

Holiday sales still drive the headlines — and the fraud. The report noted that the 2024 season’s near-$1 trillion in U.S. spending came with a 25% jump in consumer fraud losses. But the bigger story is how artificial intelligence (AI) is forcing merchants to rethink the entire risk-to-revenue equation. AI is both weapon and shield: a force multiplying fraud’s sophistication while simultaneously giving retailers the precision to fight back without clogging checkout lines or alienating loyal customers.

Key findings from the report include:

75% of the fraud digital-goods merchants faced last year came from “friendly fraud” — legitimate buyers later disputing charges because of post-holiday remorse or budget stress. Eighty-four percent of those customers bypassed the retailer entirely, filing disputes directly with banks.

88% of Americans now believe AI has increased the number and sophistication of online scams, yet only 26% of shoppers say they would accept AI-driven checkout to speed purchases. Distrust, not technology, is slowing adoption.

Even as 52% of U.S. businesses implement new AI models for fraud detection, only 37% use generative AI for that purpose. The gap underscores how many retailers are still reactive, not proactive, in their digital-risk posture.

Those numbers tell a story that runs deeper than cybercrime: Retailers are losing the trust battle even when they win the fraud fight. AI’s ability to generate “synthetic fraud data” can double compromised-card detection rates and cut false positives by as much as 85%, the report noted. Yet the same algorithms that secure payments can also unsettle shoppers if transparency lags. Fifty-eight percent of consumers worry about how their data is used, and more than one-quarter say they don’t trust any company to handle it responsibly.

That mistrust adds up to real money. PYMNTS Intelligence finds that 85% of consumers who feel ignored by customer service would be “somewhat or very likely” to file a chargeback — turning what began as a service complaint into a financial loss. AI alone cannot close that gap.

Worldpay’s Chief Product Officer Cindy Turner told PYMNTS, “Fraud prevention should enhance, not hinder, customer experience.” The goal is not just faster detection but smarter engagement, making trust part of the product.

Worldpay’s recent moves show what that future looks like. Its 2025 acquisition of AI-native fraud platform Ravelin strengthens merchants’ ability to spot payment fraud and account takeovers before they happen. A new partnership with identity-verification firm Trulioo adds a “know your agent” framework that authenticates AI agents themselves, letting verified digital assistants shop or pay on consumers’ behalf while blocking imposters.

Those advances hint at the next competitive differentiator in retail: trust infrastructure. As the report concludes, fraud prevention can no longer be confined to November through January. It must become a 12-month strategy built on layered defenses, transparent data practices and rapid customer-service response. The retailers that treat security as an extension of brand experience — not a drag on it — will be the ones that enter the next holiday season already ahead.