As digitization flourishes, the world is becoming more visual. Today, consumers rely just as much on user interfaces and graphics as they do language to get the information they need. But when it comes to the post-transaction experience, especially the point where cardholders interact with their bank statements online, rich visual details are sorely missing.
The cost? Soaring cases of friendly fraud resulting from transaction confusion and this lack of information is a missed opportunity for banks to improve customer relationships.
To discuss the importance of transaction clarity in-depth, PaymentsJournal recently hosted a webinar, “Consumers and Financial Institutions Demand More Clarity.” In the webinar, guest speakers Lee Kennedy, VP of Product Management at Ethoca, and Brian Riley, Director of Credit Advisory Service at Mercator Advisory Group, offered additional insight into how banks can address this issue in an increasingly virtual world.
The not-so-friendly nature of friendly fraud
Online sales have increased dramatically in recent years, with COVID-19 accelerating the trend. “Unfortunately, along with that comes some side effects in terms of things like extra chargebacks [and] additional fraud. But particularly, it causes a lot of confusion for cardholders,” said Kennedy.
Most people can relate to the experience of not recognizing a purchase on their credit card statement. When that happens, many consumers instinctively reach out to their card issuer to dispute the transaction.
“A large portion of things that are flagged as fraud are actually what we call friendly fraud; it was actually a legitimate transaction. There are lots of causes of that,” added Kennedy. Friendly fraud occurs when a cardholder makes a legitimate purchase, receives the goods, then disputes the charge for a refund – normally by mistake.
Often, consumers simply do not recognize or remember the purchase that they are seeing on their statement. In other cases, someone else in their household made a legitimate purchase on their card. Not knowing this, the cardholder assumes that fraud occurred and contacts their issuer to initiate a chargeback.
“A lot of those will get flagged as fraud because [consumers] don’t recognize it. [They’ll] call in and say, ‘I don’t think this was me. I didn’t make this transaction,’ and that will get treated as fraud and go through the chargeback process, which isn’t always ideal,” explained Kennedy.
This is far more common than many realize, and it is not exclusive to tech-averse consumers. In fact, 77% of consumers say they have trouble recognizing transactions when they look at their account statements.
Purchase clarity prevents disputes before they arise
Chargebacks stemming from friendly fraud are a major problem for banks. Fortunately, there is a simple way to avoid many chargebacks altogether: increased purchase clarity. “A large chunk of these disputed transactions can be easily resolved with more information. And that’s the essence of what we see,” said Riley.
Banks can add clarifying information to digital bank statements, such as a merchant’s name, logo, address, and basic contact information, to give consumers clarity about the charges they see on their card. “The best way to filter out a lot of these disputes is to do it as close to the consumer as you can, and ideally not have them have any confusion, not start down that dispute process at all… Consumer ClarityTM [CV1] really focuses on this,” Riley added.
The benefits extend beyond the consumers. Purchase clarity also enables dispute management teams and call centers to focus their efforts on resolving disputes that result from actual fraud attacks. Ethoca and Aite Group research found that providing additional transaction clarity can reduce call volume by 25% in cases where the purchase description was unclear.
Recognizing the value of transaction clarity, Ethoca released its Consumer Clarity solution to enable financial institutions the ability to give their customers access to enriched transaction details. “There’s a number of different capabilities in terms of the ability to augment your basic transaction view, the ability to provide additional merchant details and contact information, the ability to have a full digital receipt with all of those capabilities… All of that is delivered through a single product and a single integration,” described Kennedy.
Learn more about the value of Consumer Clarity
In a recent PaymentsJournal webinar, Kennedy and Riley discussed the value of Consumer Clarity in much more depth, covering topics such as:
- How to enhance the digital experience for consumers.
- How clear purchase details can reduce chargebacks and disputes.
- Why banks should partner with tech-savvy providers to achieve global coverage and deliver next generation digital experiences.
To access the complimentary webinar, please fill out the form below.