eCommerce Fraud and What to Know About Chargebacks

Fraud is widespread behavior in Latin America, observable across different sectors and manifesting in various forms, including chargebacks, one of the biggest headaches in e-commerce.

Do you have an online store or plan to open one? It's surely one of the terms you'll encounter most.

How do chargebacks happen? What should you do when they appear in your e-commerce? How frequent are they? We'll cover that below… Because a chargeback isn't just a banking procedure: it's one of the most common and costly types of fraud for any e-commerce brand. You lose the sale, you lose the product, you lose time, and in many cases you're left with the uncomfortable feeling of having been deceived. And the worst part: it can happen even when you did everything right.

This guide will help you understand what a chargeback is, why it happens, how frequent it really is in Mexico, and how you can reduce its impact before it affects your revenue. The reality is clear: online fraud is growing, but your e-commerce doesn't have to become another statistic.

Get ready, because after reading this you'll know clearly what to do, what to avoid, and how to protect your store so every sale counts… and stays with you.

Chargebacks in e-commerce: the pain of online sales

After selling and delivering the product to the customer, with the operational and logistics effort that requires, the last thing you expect is for the bank to hold the card payment funds, attributing that the cardholder doesn't recognize the transaction and classifies it as fraud. This is known as a chargeback. Has it happened to you?

Having a chargeback is something no e-commerce brand wants because of the double economic loss it generates: the sale money and, in many cases, the product, not to mention logistics costs, commissions, etc. To protect your margin, review best practices on how to calculate a product's selling price and include a buffer for chargebacks and fraud in your cost structure.

Beyond fraud, a chargeback can also occur due to other circumstances inherent to the online store.

Note the following situations that generate them:

* The card owner doesn't recognize the transaction as their own, didn't authorize it, or doesn't remember making it.

* The user reports their card as stolen or lost, attributing the purchase to someone else.

* The purchase amount was charged twice.

* Charges were made for canceled subscriptions.

* The user didn't receive the product or service.

* The buyer states the delivered product wasn't what they bought, is a different item, is damaged, or defective.

* The customer returned the product and hasn't received a refund.

* The product wasn't delivered within the promised time.

When a cardholder files a claim with their bank, it freezes the purchase payment for the e-commerce brand until it studies the case and determines whether fraud exists or the merchant failed to comply—a process that can last days and, in some cases, months.

During this period, the e-commerce brand must present proof of sale and product delivery, seeking to demonstrate the transaction was favorable for both business and customer.

Depending on the bank's analysis of the evidence presented, a chargeback will be generated if deemed appropriate, seeking to protect the cardholder from fraud with their card or failures by the e-commerce brand.

How frequent is online fraud

During the second quarter of 2021, 2,745,738 cyber fraud claims were reported in Mexico, of which 84 out of 100 were resolved in favor of the user. The study included internet commerce, mobile banking, mobile payments, and internet operations for individuals and businesses. (CONDUSEF).

Online fraud presence is so marked that, for e-commerce, according to Forbes data, 4 out of 10 purchases executed through this channel in Mexico are potential fraud. As one of the countries with the highest e-commerce growth in the region, it also becomes one of the highest risk for these crimes.

Identity theft to perform transactions in someone's name and friendly fraud, when the customer requests a chargeback after making the purchase and receiving the product, claiming they didn't make the transaction, are two of the most common types of fraud in e-commerce.

Read also: 4 challenges for e-commerce adoption in LATAM

Mexican perception of online fraud

According to AMVO studies conducted between 2020 and 2021 with more than 1,800 cardholders, asking if they had been victims of electronic fraud during the last year, 37% had unrecognized charges on their card, 22% had duplicate charges, while 20% were victims of cloning.

Regarding use of debit or credit cards for online purchases, 47% of respondents experienced payment method rejections, of which 32% had to change their card to complete the purchase, implying additional steps and expense for transaction processing.

Chargebacks: e-commerce fraud, figures and more

Studies on e-commerce conducted by the National Commission for the Protection and Defense of Financial Services Users – CONDUSEF and the Bank of Mexico yielded the following figures on chargebacks in e-commerce:

Between January and March 2021, 309,312,565 purchase requests were generated for authorization, of which 197,811,526 were approved (64%). Of those, chargebacks were applied to 968,639 (0.49%) worth 787 million Mexican pesos.

For the second quarter, between April and June 2021, 328,320,076 purchase requests were generated for authorization, of which 209,672,655 were approved (64%). Of those, chargebacks were applied to 1,043,089 (0.50%) worth 761 million Mexican pesos; in this period the chargeback percentage had a slight increase versus the previous quarter.

As we'll see in the following chart, purchase requests sent for authorization in e-commerce have been increasing quarter over quarter, as has the number of approved purchases.

At the chargeback level, the April–June 2020 quarter registered the highest number of cases, representing 0.67% of authorized purchases, while October–December 2020 showed the lowest percentage, 0.46%.

Chargebacks generate million-dollar losses for e-commerce owners, who every day seek alternatives for greater security and backing in their transactions, immersed in a constant battle between financial institutions' anti-fraud systems and criminals trying to breach them.

Read also: From 0 to E-commerce: everything you need to know to create your online store

Other interesting figures on fraud and chargebacks in Mexico

* According to Erick McKinney, country manager of Adyen Mexico (global payments platform), the payment authorization rate with cards in e-commerce during 2020 was 52%, rising to 60% in 2021—a figure that reaches 95% in countries with more secure payment systems.

* At the Latin America level, according to Blacksip data, the average authorized purchase rate is 57% and the chargeback rate is 1.7%. Compared to countries like the United States where authorization rate is 89% and chargeback rate is 0.4%, the region still has significant growth ahead in online transaction control and security systems.

* Between January and June 2021, payments in e-commerce represented 21.1% of total card payments (in traditional commerce and e-commerce). During this same period, of total authorized purchases, 29% corresponded to credit cards and 71% to debit cards.

Read also: Online sales: keys to a successful e-commerce
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Understanding chargebacks as a structural risk of your e-commerce

Chargebacks aren't a "bank problem"—they're the cost of doing (bad) e-commerce

Many digital businesses see chargebacks as something that "happens over there with the bank and payment gateway," but in reality it's a structural risk of your business model.

Each chargeback touches at least three fronts:

• Finance → you lose the sale money, often the product too, plus commissions and operating costs.
  
• Operations → you already invested in storage, picking, packing, shipping, and customer service.
  
• Reputation → banks and gateways monitor your chargeback rate; if it spikes, you can face higher fees or restrictions.
  
  

Understanding this completely changes the mindset: the goal isn't just to "defend against" a specific chargeback, but to design an e-commerce less vulnerable to fraud and payment disputes.

Three major chargeback origins: not everything is malicious fraud

In practice, chargebacks usually come from three major cause groups:

1. Real fraud (identity theft, cloned card, stolen card)
   
   The holder didn't make the purchase, doesn't recognize the charge, and usually finds out when reviewing their statement.
   
   Here the problem is transaction security and anti-fraud filters from bank/gateway/merchant.
   
   
2. Friendly fraud
   
   The buyer did make the purchase and received the product, but later claims they don't recognize the charge or "didn't do it."
   
   In this case the challenge is proving delivery and transaction legitimacy while having processes that discourage this behavior.
   
   
3. Operational and service problems
   
   
   • Product that doesn't arrive or arrives very late.
     
   • Wrong reference, size, color, or unit.
     
   • Product damaged or very different from what was promised.
     
   • Returns not processed on time.
     Here "fraud" isn't external: it comes from logistics failures, lack of communication, or internal disorder.
     
     

When you analyze chargebacks with this logic, you stop seeing them as random and start building a clear risk map.

The silent impact: how chargebacks erode your profitability

A chargeback isn't just a lost sale. Broken down, it normally involves:

• Product cost (you no longer have it or can't resell it as new).
  
• Full logistics cost: storage, preparation, shipping, and often reverse logistics.
  
• Team hours: handling the claim, gathering evidence, following up with gateway and bank.
  
• Financial commissions that aren't always recovered.
  
  

If your chargeback rate grows, this can lead to:

• Commission increases from the gateway or bank.
  
• Blocks or restrictions on your merchant account.
  
• Need to tighten filters (which reduces conversion).
  
  

In summary: poor chargeback management doesn't just "hurt"; it can make your operation unsustainable, even if you sell a lot.

Fraud vs. friction: the balance that makes the difference

A common mistake is responding to chargebacks by activating "panic mode": more filters, more steps, more verification.

The result? Less fraud… but also fewer sales.

Your challenge is finding a healthy balance between security and shopping experience:

• Too lax → fraud gets in.
  
• Too rigid → you reject legitimate customers and lose conversions.
  
  

That's why it's key to rely on payment providers with advanced anti-fraud engines while caring for internal variables: billing clarity, delivery times, order accuracy, and proactive communication.

This is where having robust logistics operations (for example, with a specialized fulfillment partner like Cubbo) helps reduce chargebacks that actually come from operational errors, not criminals.

Chargebacks and logistics: the piece many underestimate

Much of what customers use to justify a chargeback has to do with delivery:

• "I never received the product."
  
• "It arrived late and I no longer wanted it."
  
• "It wasn't what I ordered."
  
• "It arrived damaged."
  
  

In other words: if your logistics fails, your chargeback risk rises.
A solid fulfillment model, with:

• Controlled inventory,
  
• Accurate order preparation,
  
• Proper packaging,
  
• And on-time deliveries,
  
  

radically reduces the proportion of cases that escalate to the bank.

That's why talking about e-commerce fraud without talking about logistics operations is seeing only half the picture.

Who does e-commerce fraud affect?

Electronic fraud is a barrier to online sales growth that generates repercussions for different actors:

* Online stores through chargeback generation and product losses. Plus loss of customers who probably won't return when their payment method isn't accepted. More than products, e-commerce brands sell trust, agility, and service.

* Financial institutions, generating millions of cases to study and requiring new control mechanisms to increase transaction security.

* Buyers, strengthening distrust due to fear of fraud or increasing payment difficulty due to security controls.

How to avoid chargebacks in your e-commerce? Effective tips

While fighting electronic fraud is a difficult battle, you can implement certain actions to minimize chargebacks in your e-commerce:

1. Use payment gateway services that provide guarantees and backing against eventual fraud and chargebacks. Look for certified security controls that protect your transactions and finances. Gateways like Mercado Pago and PayPal offer anti-fraud insurance and Seller Protection Programs where, under certain conditions, the gateway covers the chargeback without deducting money from the merchant. If you sell on Mercado Libre, align your policies and delivery evidence with the marketplace's.
2. Maintain permanent communication with the customer to inform them about order status or any delivery issue. This avoids refund requests due to uncertainty. Complement this with demand planning based on sales forecast types to anticipate peaks, avoid stockouts, and prevent delays that trigger claims.
3. Be as clear as possible in product descriptions and images to avoid chargebacks due to dissatisfaction. Also verify that preparation and transport are done correctly to avoid product damage. Use warehouse KPIs to reduce operational errors that end in returns.
4. Inform the customer how your e-commerce will appear on their statement, preferably with your brand name. This helps the user recognize the transaction immediately and avoid disowning it due to forgetfulness.
5. Handle duplicate charges quickly. If you detect a payment error, contact the customer immediately and refund before they initiate a bank dispute.
6. Keep all documentation supporting the purchase and delivery. Having solid proof (dispatch tickets, signatures, delivery confirmations) is your best defense to win a chargeback dispute with the bank.
7. Be clear in your return policies, specifying exact refund times. Responding promptly to customer questions reduces friction and the likelihood of formal claims.

If your store runs on platforms like Shopify or WooCommerce, install anti-fraud modules, enable 3D Secure, and automate manual review rules for high-risk transactions.

Fraud and chargebacks are a reality facing e-commerce. As the sector keeps evolving in Latin America, payment systems must too, as they have in territories like China, where cash, debit, and credit card payments were replaced by QR code and facial recognition payments. Can you imagine selling using this type of technology?

Avoiding chargebacks should be a goal in your e-commerce, where one key point is efficient product preparation and meeting delivery times to prevent customers from requesting refunds. If you're looking for a partner to help manage inventory, improve deliveries, boost fulfillment, and increase customer satisfaction, contact us—we're the best Fulfillment Center for e-commerce in Mexico and Brazil. Just click here. With solutions like Querétaro fulfillment, you can further strengthen your logistics operation. Just click here.

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Information sources:

Ecommerceguide / Condusef / Condusef / Conekta / Expansionmx / Finnovista / Forbes / Adyen / Cybersource / Portafolio / Openpay / Mercadopago / Uaem / Blacksip

Rankinslatam / Paypal / Paypal / Elceo