Chargeback Season 2026: The Post-Holiday Profit Leak
- Jon Allen
- Jan 21
- 3 min read
January has a special kind of chaos.
You’re trying to close Q4. Retailers are resetting priorities. Customers are returning gifts, disputing charges, and testing policies. And suddenly your finance team is staring at a number that feels… unfair.
Chargebacks.
If you’re a supplier with any meaningful e-commerce footprint—direct-to-consumer (DTC), marketplace, or retailer.com—this is your reminder that a sale is not a sale until it survives the dispute window.
The trend line is moving in the wrong direction
Sift’s Q4 2025 Digital Trust Index reported that average chargeback rates climbed through 2025, reaching 0.26% in Q3 2025—a 53% increase compared to Q1 2025. It also cited retail e-commerce chargeback rates that have exploded by 233% since Q1 2025.
Chain Store Age also reported similar figures, pointing to the same rising pattern of disputes.
That’s not a rounding error. At scale, it’s a margin event.
Why January is when it shows up
Post-holiday disputes come from a few familiar places:
“Item not received” claims when shipments are delayed or misdelivered
buyer’s remorse masked as “fraud” (often called first-party or friendly fraud)
subscription renewals or repeat shipments that the consumer forgot about
confusing product descriptions (wrong expectations lead to disputes, not returns)
And here’s the accelerant: consumers are shopping with AI tools more than ever.
Adobe reported that U.S. online holiday spending reached $257.8 billion (Nov. 1–Dec. 31, 2025) and noted a 693.4% year-over-year increase in traffic from AI sources to retail sites during the season.
More digital shopping volume and faster discovery can lead to more downstream disputes—especially when expectations aren’t clearly set.
A fictional scenario (clearly fictional)
Fictional example: A customer orders a bundle on your marketplace listing. One item arrives damaged. Instead of requesting a replacement, they file a chargeback for “product unacceptable.”
Your team now has to produce evidence:
proof of delivery
order details and product description at time of sale
return/refund policy
communication logs
sometimes even packaging photos
If you can’t pull that packet quickly, you lose by default—and the bank doesn’t negotiate feelings.
What chargebacks mean for suppliers
Chargebacks are not just a lost sale.
They can include:
the reversal of the transaction
chargeback fees
operational time
higher fraud risk scoring (which can raise costs and reduce approvals)
brand damage if customers see your experience as “hard to work with.”
In Q1, when every basis point matters, chargebacks can quietly eat the gains you fought for in Q4.
A supplier playbook for Q1 2026
You don’t fix this by “working harder.” You fix it by tightening the system.
1) Make “proof” a built-in capability
Your goal is to make chargeback evidence easy to assemble.
Create a standard evidence packet template:
order confirmation + invoice
carrier tracking + delivery scan (and signature if you use it)
product page screenshots (title, key claims, size, bundle contents)
policy page snapshot (returns/refunds)
customer communication timeline
If it takes two hours to build one dispute packet, your process will break at scale.
2) Reduce disputes by improving expectation-setting
A surprising number of disputes start as confusion:
unclear sizes
vague bundle descriptions
misleading imagery
unclear subscription terms
Tighten your product pages. Be painfully clear.
Boring clarity reduces expensive conflict.
3) Track reason codes like a profit dashboard
Don’t just count disputes. Categorize them:
not received
not as described
damaged
unauthorized
subscription confusion
Then map each bucket to an operational fix.
This is how you stop repeats.
4) Set a dispute threshold and response time target
Not every dispute is worth fighting. But you must decide that intentionally.
Define:
a minimum dollar threshold for manual effort
a response time target (service-level agreement) for submitting evidence
Slow responses lose money.
5) Tie disputes back to fulfillment and packaging quality
If “damaged” disputes are rising, that’s a packaging and handling issue. If “not received” is rising, that’s a carrier or address validation issue.
Chargebacks are not a finance problem. They’re an operations signal.
Where Woodridge Retail Group fits (without the pitch)
If you’re a supplier staring at Q1 dispute volume and wondering where to start, the answer is almost always the same: establish a dispute playbook, shorten the evidence cycle, and eliminate the top 1–2 drivers.
Woodridge Retail Group can help suppliers diagnose the pattern and build a repeatable workflow—so your team spends less time chasing disputes and more time growing the business.
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