A company that helps online merchants fight chargebacks said claims started trending upward during the COVID pandemic, as online shopping boomed and customers looked to recoup funds without leaving the house or having to navigate merchant customer service. And the way merchants manage chargebacks and the process to collate evidence to dispute fraudulent claims have failed to evolve at the same pace.
Riskified, which offers fraud prevention services and risk intelligence, unveiled a report this week called, “Chargeback Challenges and What You Can Do About Them: Global Insights 2024,” based on a survey conducted in partnership with Paladin Fraud of over 300 ecommerce chargeback managers worldwide. In announcing the new report, Riskified stated:
“Chargebacks serve as a mechanism for cardholders to dispute purchases with their payment issuers instead of a merchant, often leading to the rightful reversal of the transaction by merchants. Although intended to protect consumers, there’s a growing trend where this process is being exploited by unethical shoppers to reclaim funds through deceptive means.” It added that the cost and complexity of managing disputes, combined with the sheer volume of claims, has created “chargeback chaos,” and it said merchants are losing essential revenue as a result.
According to the findings, chargebacks are on the rise with 76% of chargeback managers seeing as many or more chargebacks year over year. So called “friendly fraud” is a key part of the problem, with over 73% of respondents saying that at least 20% of their chargebacks are first-party fraud, making it trickier to dispute.
Merchants are electing to let revenues slide, with nearly 60% leaving at least two in five chargebacks undisputed, according to the survey, and over 65% of merchants want AI and automation for some or all of the chargeback management process to help recover more revenue and increase efficiency.
Merchants can download “Chargeback Challenges and What You Can Do About Them: Global Insights 2024” on the Riskified website.
