Ethoca’s Integrated Solutions Suite combats chargeback fraud

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Ethoca, a provider of collaboration-based technology solutions, this week announced the launch of its new Integrated Solution Suite.

When adopted at full scale across the industry, Ethoca’s suite of products – including Ethoca Eliminator, Ethoca Alerts and Enhanced Representments – can mitigate up to 90 per cent of chargebacks from genuine fraud, friendly (or first-party) fraud and false claims, the company said.

Today’s ecommerce ecosystem is plagued by issues increasing friction in the purchase process. With friendly fraud (whether innocent or hostile) and false claims now reaching 90 per cent of all fraud volumes in sectors like digital goods, card issuers, merchants and customers are facing a downward spiral of disputes that are impacting card acceptance. Industry estimates suggest false declines – when good customers are falsely declined due to the risk of fraud – are continuing to increase. For every $1 in confirmed fraud, $13 in legitimate transactions are falsely rejected. Customers experiencing a false decline will elect to abandon purchases at trusted ecommerce websites, pull out a different payment card or, in 39 per cent of cases, potentially abandon the purchase altogether.

Ethoca’s new solution suite provides three lines of defence. The first is Ethoca Eliminator, which allows card issuers to tap into deep merchant intelligence (shopping cart details, IP address, account details, etc.) at the first moment a cardholder clicks on a transaction in their mobile banking app or calls into their bank to question a transaction. This allows cardholders to better recognize their own transactions, regardless of whether the intention to dispute is innocent or malicious.

In a pilot with a top-five U.S. card issuer and major digital goods merchant, Eliminator successfully deflected 38 per cent of disputes that would have otherwise become damaging chargebacks, Ethoca said.

The second line of defence is Ethoca Alerts – the company’s flagship product introduced in 2010. If during the Eliminator process a cardholder still insists on disputing the transaction, card issuers participating in Ethoca’s network will provide confirmation of fraudulent or disputed transactions to Ethoca. Ethoca makes this actionable intelligence available to more than 5,400 merchants participating in Ethoca’s network through real-time alerts that provide a window of opportunity to stop the fulfilment of goods and services and refund the transaction to avoid the chargeback. Card issuers who use the service benefit by avoiding chargeback processing costs and recovering fraud losses – including 3D secure and low-value transaction write-offs – much more quickly and inexpensively than ever before.

The final tool are Enhanced Representments. Merchants with  compelling evidence to prove a case of friendly fraud or challenge other transaction disputes are often focused on recovering revenue they would otherwise lose through the chargeback process. Enhanced Representments are a completely automated solution focused on responsibly disputing chargebacks. It preserves an equitable balance across the ecosystem by enabling merchants to fight only those chargebacks supported by the right compelling evidence and without creating downstream pain for card issuers who are often negatively impacted by indiscriminate representment behaviours.

“Ethoca’s belief is that a layered approach – powered by the global collaboration network we pioneered – is the only real solution to combat the pervasive friction and poor customer experience typical of today’s ecommerce environment,” said Keith Briscoe, Ethoca’s chief marketing and product officer. “Aiming to eradicate 90 per cent of chargebacks while laying a new foundation for a transaction acceptance experience where no good customer is turned away is our current mission. This new solution suite takes us one step closer to our vision: creating a new set of rails for the rapid exchange of rich transaction data and intelligence designed to finally make frictionless ecommerce a reality.”

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