Fraud-guarantee insurance covers stolen-card fraud only — the ~30% of disputes — and prices it at 0.4–2% of ALL revenue. It does nothing for [friendly fraud and consumer disputes](/blog/friendly-fraud-65-percent-problem), the ~70% majority. Representment attacks the full dispute spectrum on success-fee pricing. For most Shopify stores the right stack is: free coverage where it exists (Shopify Protect), screening for true fraud, representment for everything — and guarantee insurance only where fraud concentration genuinely justifies its premium.
The three products
- Fraud guarantees (Signifyd/Riskified model): approve-and-guarantee — covered fraud chargebacks get reimbursed. Priced as a percentage of all screened revenue. Scope: fraud codes only.
- Screening (Shopify fraud analysis, Aurai Prevent): risk-scores orders pre-fulfillment. Prevents losses rather than transferring them.
- Representment: fights filed disputes with evidence, recovering money across ALL codes — fraud, not-received, quality, subscription. Success-fee priced.
The categories aren't substitutes: insurance transfers a slice of risk, screening shrinks it, representment recovers what lands anyway.
The coverage math
Guarantee pricing: 0.4–2% of all revenue against protection on ~30% of dispute volume. At $2M revenue and 0.6% pricing, that's $12K/year — worthwhile only if fraud losses exceed it, which typical Shopify fraud rates don't.
Representment pricing: percentage of recovered only. At 40 disputes/month averaging $95 and an assumed 75% win rate, ~$2,850/month recovers with zero fixed cost — and it addresses the 70% of disputes insurance ignores.
Default stack for most stores: Protect (free) + screening (free with Aurai) + representment (25% of wins). Add guarantee insurance only with demonstrated fraud concentration — high-AOV electronics, luxury — where the premium clears actual fraud losses.
Frequently asked questions
Does chargeback insurance cover friendly fraud?
No — fraud guarantees cover stolen-card fraud codes only. Friendly fraud and consumer disputes (the ~70% majority) fall outside coverage; representment is the only recovery path for them.
Is Shopify Protect insurance?
Functionally yes for its covered slice — eligible Shop Pay fraud disputes — and it's free. That makes it the first layer of any stack; just don't mistake its [narrow eligibility](/blog/shopify-protect-eligibility) for full coverage.
Post reflects public documentation and industry surveys as of the publish date. Win rates and other figures are indicative ranges, not guarantees and not Aurai results; outcomes vary by merchant, evidence, and issuer. Visa, Mastercard, American Express, Discover, Stripe, PayPal, and Shopify are trademarks of their respective owners; Aurai is independent and not endorsed by any of them. Network rules change — always verify current official rules before acting on any specific tactic.