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 a 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, industry surveys, and Aurai's own book of disputes as of the publish date. 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.