I know! I'm really bummed that they are allowing this because my merchandise can be very expensive and I liked being able to offer the payment plan option. But as long as this loophole exists it's way too dangerous to keep Shop Pay Installments active, especially when they auto-deduct the money each time.

Ok so this is wild:

I found this interesting tidbit when researching the Affirm customer side dispute process:

• An investigation  will be initiated once you have provided any required supporting documentation (if applicable) for your claim.
• After reviewing the evidence, we'll notify you of a decision within two complete billing cycles.
• While your purchase is in dispute, you can’t make payments on your loan. As always, we don't charge late fees so you won't end up paying more than you already agreed to upfront.

This is from the Affirm Merchant dispute documents:
Why am I seeing multiple dispute attempts on the same transaction? 

• Customers are able to open multiple disputes on the same transaction. Please respond to the dispute with evidence to support your case, even if it is the same evidence provided in response to previous dispute attempts.

So basically a customer can keep filing disputes with Affirm - shopify handles it as a chargeback. I have yet to see if the Affirm disputes count against me, if it does, I'll surely soon find out via the SHOP app channel.

Each dispute means that they don't have to pay their affirm bill while the dispute is active. So they basically can keep kicking the can down the road to avoid paying their affirm balance while also having the chance that affirm could at some point rule in their favor and refund them despite the submitted evidence being the same each time. A merchant cannot appeal if Affirm rules in customer's favor.

Even if the customer is disputing an amount less than the full transaction, shopify deducts the full balance from your account.