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Friendly fraud now accounts for tens of billions of dollars in annual damage.
By Shula Rosen
An Israeli startup aiming to overhaul one of e-commerce’s most costly headaches has secured a major cash infusion.
Chargeflow, which builds AI-powered tools to automate chargeback disputes, announced a $35 million Series A round this week, including a $10 million debt facility. The investment was led by Viola Growth, with participation from existing backer OpenView, bringing total funding to $49 million.
The New York– and Tel Aviv–based company said the new funding will accelerate product development and expand its global reach as demand from large merchants continues to surge. Chargeflow—already used by more than 15,000 merchants worldwide—reported tripled year-over-year revenue and says it is now scaling enterprise sales out of its New York office.
Chargebacks were created initially to protect shoppers from fraud. Instead, they have become a financial drain on retailers. Mastercard estimates that annual chargeback volume will reach 324 million cases by 2028, with nearly 80% attributed to what the industry calls “friendly fraud.” This occurs when customers dispute legitimate purchases—sometimes by mistake, sometimes deliberately—leaving merchants to absorb the loss.
Friendly fraud now accounts for tens of billions of dollars in annual damage.
Chargeflow’s platform attempts to reverse that trend by automating the entire dispute process. Its system plugs into more than 100 commerce and payments platforms such as Shopify, Stripe, PayPal, WooCommerce, Adyen and Afterpay.
Once connected, the AI collects transaction data, assembles evidence, files the chargeback response, and tracks the outcome—functions that traditionally require merchants to navigate scattered dashboards and time-consuming paperwork.
The Israeli startup says its technology also prevents many cases from ever becoming disputes. By analyzing behavioral patterns and post-purchase data across its vast merchant network, the system flags potential friendly-fraud attempts in real time.
Chargeflow claims merchants see up to four times higher win rates compared to manual processes.
“Chargebacks were designed to protect consumers, but over time the system has become unbalanced,” CEO and Co-founder Ariel Chen said in the press release. “With our industry-leading technology, we prevent nine out of ten disputes before they even occur and recover more revenue from the rest.”
Investors say the company’s efficiency and rapid adoption set it apart. “Chargeflow has established itself as the industry’s gold standard,” said Natalie Refuah, General Partner at Viola Growth, Israel’s largest growth fund. She pointed to the startup’s expansion into new products—Chargeflow Connect and Chargeflow Prevent—as evidence of its broader ambitions.
Refuah added that as global e-commerce volumes have soared to $7.5 trillion, chargeback-related losses have become one of the largest operational burdens for merchants.
With fresh capital, Chargeflow plans to build out its end-to-end AI ecosystem and deepen its footprint among large retailers—positioning the Israeli startup as a central player in the battle against post-purchase fraud.
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