Chargebacks Largely Caused by Confusion

Chargebacks Largely Caused by Confusion

June 11, 2020

False claims are a significant and growing problem for digital goods merchants, and rates can reach more than 80 percent, according to new research from Ethoca and Aite Group that reveals transaction confusion is leading to more chargebacks. 

“Cardholders reviewing their online statements often have trouble deciphering the brief, unclear descriptions that accompany each transaction, or they mistake genuine transactions made by other members of their household for fraud. This uncertainty often leads cardholders to contact their card issuer to dispute unrecognized transactions,” the two firms said in a release on the study.

The report, which surveyed more than 1,000 consumers, focused on the cost of chargebacks to U.S. issuing banks. Those costs are expected to grow from $690 million in 2020, to more than $1 billion by 2023. The report also found that providing additional transaction clarity has the potential to reduce call volume by 25 percent in cases where the description of the purchase was unclear. 

More communication, clarity needed in transaction data 

The research also finds that communication is key in addressing chargebacks as 27 percent of consumers report that, once they connected with their financial institution, the charge wound up being correct.

Cardholders want more insight into their purchases, the survey found: 72 percent of consumers engage with their financial service providers’ website or mobile application at least once a month, and 96 percent of consumers expressed a preference for having more detailed transaction information available to provide increased clarity. 

The features identified by the survey as being most valuable for alleviating transaction confusion are:

  • A picture of the printed receipt
  • The date and location of delivery for online purchases
  • A full list of products purchased
  • A link to refund and return details for the purchase

“It is more important than ever for issuers to be able to facilitate user-friendly self-service capabilities,” said Julie Conroy, research director with Aite Group. “The provision of detailed transaction information in the digital channels and call center is an important underpinning of any digital dispute capability.”

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Joan Goodchild

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