By Eli Waldman
Director of Recovery Services
Many customers use chargebacks as a way of retrieving funds spent on a purchase that didn’t go as expected. However, in many cases, consumers misuse the chargeback process either intentionally or by issuing requests for trivial reasons. Merchants are fighting back by insisting issuing banks be more selective about chargeback requests and using automated tools that help them prevent chargebacks.
What does this mean for consumers? First of all, it means that a chargeback victory should not be taken for granted. Issuing banks are more cautious about pursuing complaints and demand more evidence from the consumer. To win a chargeback, it is best for customers to hire fund recovery services and work with a financial company that often wins chargebacks on behalf of customers.
MyChargeBack experts create intelligence reports and crypto reports that help investigators track down crypto scams. We also provide guidance to consumers who are trying to recover their funds from broker disputes, forex scams, or other types of fraud. Talk to MyChargeBack professionals and get started on fund recovery.
What Is a Chargeback?
A chargeback is the reversal of charges on a credit card. Customers can file a chargeback claim with the issuing bank of a credit card. Every issuing bank has its own rules about what constitutes a legitimate chargeback claim. Many will have two categories: fraud and dispute.
Issuing banks often define ‘fraud’ more narrowly than we do in ordinary conversation. For instance, we may call a merchant or broker a ‘fraud’ if they don’t provide us with what we pay for. Either the item or service is unsatisfactory or is not given at all. This does not fit the definition of ‘fraud’ as stipulated by an issuing bank, which defines ‘fraud’ as unauthorised transactions.
Therefore, if the customer authorised the transaction, it falls in the category of ‘dispute’ rather than ‘fraud.’ The merchant or broker may indeed be fraudulent, but if you authorised the transaction, it is a dispute.
The chargeback process involves the issuing bank adjudicating between the customer and the merchant. The issuing bank makes the final decision. There has been a huge increase in the number of chargebacks in recent years. As a result, merchants are complaining about huge losses and the pressure of giving refunds or agreeing to chargebacks for the sake of customer service or to avoid negative reviews.
In response to these complaints from merchants, issuing banks have become more selective about accepting chargeback cases and demand more evidence from customers who file a complaint.
The Rise of Chargeback Fraud
In addition to the number of chargeback requests increasing, there has been a rise in chargeback fraud, which involves a false chargeback claim made by a customer who wants to take advantage of the fund recovery process.
Often termed ‘friendly fraud,’ chargeback fraud occurs when the customer wants to keep and enjoy the product or service but wants their money back all the same. It is the digital equivalent of shoplifting, and is a growing problem for merchants, since it eats up huge amounts of their revenue.
Ways Merchants Fight Chargeback Fraud
Merchants are increasingly fighting back against chargeback fraud. They place pressure on issuing banks to be more selective about chargeback claims. Issuing banks want to keep customers happy but they also do not want to sacrifice their good relationships with merchants. Therefore, customers should no longer assume they will win a chargeback claim.
Automated tools, such as Justt are designed to weed out false chargeback complaints and protect merchants. Justt is a chargeback mitigation tool that uses AI to notify merchants instantly of chargeback requests and allows them to sort through and evaluate evidence. Technology like Justt is a weapon in the merchants’ arsenal to fight chargeback claims.
What Consumers Need to Win a Chargeback Claim
According to the Justt website, 80% of chargeback claims are illegitimate. This statistic, however, was not supported by actual data. It may be the case that the 80% figure is exaggerated, but if merchants believe that the number of false chargeback claims and chargeback frauds is so high, that is sobering news for customers who are acting in good faith.
Given the rising suspicion about chargeback fraud, although it is partially justified, even legitimate chargeback complaints are likely to be called into question. A bot or a tool could automatically reject a customer’s chargeback claim even if they have a good reason for filing one. Although issuing banks still use human ingenuity to decide these cases, if they also adopt bots to weed out complaints, the result could be thousands of legitimate chargeback complaints being thrown out.
How Fund Recovery Services Can Help
More than ever, fund recovery services are essential for winning a chargeback claim. Given the rising concern over chargeback fraud, merchants and issuing banks are going to be more selective than in the past about chargeback cases claims they agree to listen to and those they accept. This means consumers have to provide more convincing evidence than ever before. And the best way to make sure that evidence is convincing enough is to rely on the experience of professional independent chargeback experts.
It is hard to believe that 80% of customers with chargeback claims are acting in bad faith, but this number is being published on websites and blogs without links to actual studies that have proven this statistic to be correct. This could indicate that chargeback complaints will be greeted with suspicion and scrutiny and fund recovery services are vital to making the customer’s case and winning a chargeback claim.
Do Need a Chargeback Professional? Contact MyChargeBack!
If you are filing a chargeback request, it is important to seek guidance immediately. Consult with MyChargeBack experts and provide information that can help us present your case to banks regarding your chargeback claim and, if needed, speak to regulators and authorities. We can assist investigators and help you with fund recovery.