The `2023 Chargeback Field Report` offers retailers and financial institutions an overview of the current situation of first-party misuse, friendly fraud, and chargeback management within the card-not-present (CNP) and ecommerce payments and transactions.
This year’s Field Report includes insights from approximately 4,000 customers that were surveyed on their preferred transaction dispute procedures, as well as their perception of chargebacks in general. This survey aimed to offer banks, businesses, and financial institutions indicators of possible causes of chargeback fraud in the industry.
The publication features a survey containing interviews with more than 300 retailers as well, including small businesses, companies, and enterprise merchants. This revealed that nearly three-quarters of surveyed respondents reported a 19% average increase in friendly fraud, a threat that currently represents a significant concern for their businesses.
Friendly fraud is an important subject in the Field Report, as it was shown that this type of fraudulent activity is a larger concern than criminal fraud. Regarding the estimated percentage of chargebacks that were the result of a friendly fraud operation, merchants and traders reported an average of 44%.
The disconnection between shoppers and the inner workers of companies can be one of the main reasons why chargebacks happen since many surveyed customers mentioned that they go straight to their bank to fill a chargeback, without trying to contact the merchant first. In addition, the publication showed that 72% of cardholders and users took into consideration that filling a chargeback with their bank is a valid alternative to requesting a refund from the merchant.
The main reason why customers will seek a resolution to their problem directly with the bank represents a matter of convenience, according to the Field Report.
The report showed that only 32% of survey companies and merchants are currently using an alert system to resolve disputes and prevent chargebacks from being filed, with a 27% average reduction in them. Moreover, it was reported that companies that leverage represented software, services, and solutions through a platform provider had a net recovery rate of more than 55% higher than merchants that managed the entire process internally.
Chargebacks911 proposes a response that merchants can take in order to address this trend. In order for retailers and traders to not compete with cardholders’ banks, they should prevent and confront the situation. Merchants and traders of all sizes should challenge any chargebacks that show signs of friendly fraud or first-party misuse they receive.
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