Carolyn Sweeney
Carolyn Sweeney

As technology changes so do chargeback-related disputes

Consumers better get ready for some big changes in how chargeback-related disputes are addressed in 2018, The Chargeback Company’s director of global business development Carolyn Sweeney said.

Ms. Sweeney spent 22 years at MasterCard before joining The Chargeback Company last April. She said over the past wo decades chargebacks have been a growing problem due to changes in technology. While the process was initiated to help consumers easily find resolution when a transaction went wrong, the combination of the growth in electronic transactions, card present fraud, and many lax cardholders not closely watching their statements have caused chargeback frequency to explode.

Carolyn Sweeney
Carolyn Sweeney

There is no denying legitimate fraud is a significant issue, but friendly fraud is also a large and expensive problem, Ms. Sweeney explained. Due to associated costs, growing chargeback frequency and the time it takes to address each one, consumers will have a harder time contesting such chargebacks in 2018 as companies eschew the “customer is always right” mantra in favor of taking a closer look at claims.

If a card wasn’t stolen and transactions are in dispute, the company will look to determine who made the transaction. Perhaps a parent did not know a child used their card, for example.

It may also be a matter of imagined shopping cart abandonment, another growing problem. In 2017, e-commerce shoppers added more than $9 trillion to their baskets but abandoned 75 per cent of that total for a list of reasons ranging from high shipping fees and taxes to length of checkout time to website issues. It happens so frequently sometimes the customer doesn’t even know they have actually completed the transaction, which brings a shock when they get the bill. In such cases the data will be parsed to determine at what point they abandoned the process and why. The device used to initiate the transaction will be identified by its identification number so the actual user can be determined.

“Often the customer concedes didn’t realize that they paid, they thought they were kicked out,” Ms. Sweeney said. “Customers think they have no liability when they actually do.”

While technology will have its place in the chargeback resolution process, don’t expect it to become fully automated, Ms. Sweeney said. There are many aspects to a normal transaction, each with its own technology involved. Which technology the consumer used to initiate the transaction, what system the merchant uses, which ones the processor uses…They all have their own unique design and integrating the thousands of different processes of each institution and vendor is an impossible task.

“You have to peel back all of the things and say to all parties to go back to the basics, have data from the issuer and show how the transaction unfolded,” Ms. Sweeney said. “When you have a human consumer involved and a human merchant involved you have to add some humanity to the process, look at it and unravel it.”

The more efficiently the problem of chargebacks can be addressed, the better it will be for merchants, most of whom have no idea how significant the effect of chargebacks is on their bottom line, Ms. Sweeney said.

“The average is 24 per cent of their operating budget is spent on chargebacks. They don’t see that clearly.”

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