Chargebacks Are on the Rise: What Customers Need to Know

When customers are not happy, they often feel they have the right to get their money back. There is some justification for this, but in recent years, many merchants and issuing banks feel that this has gone so far and the scales have tipped in the wrong direction. 

The number of chargebacks has increased dramatically, and it is likely that it may be harder to get money back from merchants and brokers as issuing banks seek to redress this imbalance. Therefore, customers with chargeback claims may need assistance and strategies for fund recovery. If you need your money back, FundRecovery UK will help. 

FundRecovery UK will prepare your case and be your advocate. Our professionals have expertise and strategies that will improve our chances of getting your funds back. We consult with clients, assist them with intelligence reports and negotiate with banks and other institutions. Talk to us about your fund recovery case and we will assist you.

What are Chargebacks? 

A chargeback is a reversal of charges on a credit card transaction. It is one of the most customer-friendly forms of fund recovery, although no customer should assume that they will get their money back, since the matter is decided by the issuing bank. The bank that issues the credit card will examine a chargeback claim and can accept or reject it.

If the issuing bank decides to accept a chargeback claim, they will ask the customer to state their complaint in more detail with an account of what happened with the merchant. The issuing bank will ask the merchant or broker for their version of events and will decide between the two parties. 

Why Are Chargebacks Increasing? 

Chargebacks have been increasing steadily in the past few years. Currently, it is predicted that chargebacks will rise 41% every two years. This has consequences for issuing banks, merchants, and customers. The following are reasons for the rise in chargeback complaints: 

  • Increase in eCommerce transactions
  • Supply and Delivery Problems
  • Consumer Power
  • Chargeback Fraud

There has been a dramatic rise in eCommerce transactions. The trend began before the pandemic, but COVID-19 intensified the demand for convenient online shopping. Many brands expanded their online presence during this period and where there are more purchases on the internet, credit cards and payment platforms are used more often. Therefore, it is natural that chargebacks have increased with more online purchases. 

The reverberations of factory shutdowns and labor disruptions are still felt as economies have opened up again. Many people are not returning to their on-site jobs and labor shortages have intensified supply problems and the lack of delivery staff. 

Another reason for an increase in chargebacks is the rise of consumer power. If customers complain to a merchant, they may threaten to write a negative review or warn that they will write an account of their experience with the merchant on their social media page. To protect their reputation, merchants often feel that they are backed into a corner and have to give a refund. However, this is changing, because merchants are losing revenues to demanding customers. 

Sometimes merchants are victims of customers. Chargeback fraud or so-called “friendly fraud” is like digital shoplifting. Customers intend to keep an item and still ask for a chargeback, claiming they are dissatisfied. This is a growing problem that is getting some response from issuing banks and merchants. 

In one survey,  8 out of 10 merchants felt that chargeback fraud was causing problems for their business. Increasingly, issuing banks do not want to jeopardize their relationships with merchants by granting more chargebacks, so they are becoming more selective about which chargeback claims they will investigate and how often they will reverse charges. 

What This Means for Customers

Customers should no longer assume they are likely to reverse charges from a transaction. This was never a certainty in the past, but issuing banks are becoming more selective and showing more scrutiny when deciding chargeback cases. It is important for those who want to reverse transactions to be prepared for the fund recovery process and to make a strong case. 

What to Do If You Need Fund Recovery?

There are several things customers can do to strengthen their chargeback claim:

  • Become familiar with the chargeback process
  • Ensure the claim is in the right category
  • Provide plenty of documentation
  • Return the item
  • Seek fund recovery assistance

Before beginning the chargeback process, consumers should be aware of the steps involved from filing the initial claim to presenting their argument to the issuing bank. Every issuing bank has slightly different procedures and these are updated regularly, so peruse them carefully before filing a claim. 

One of the most common and avoidable chargeback mistakes is filing a claim in the wrong category. Fraud is defined by most issuing banks and unauthorized charges. In other words, if the customer consented to the transaction, it is not considered fraud, even if the merchant or broker is dishonest in their practices. If the customer has an issue with the product or service, this is in the category of a dispute. 

To persuade the issuing bank, you will need to provide extensive documentation backing up your claims. This means keeping all communications with the merchant or broker, contracts you may have signed, and including pictures of landing pages and anything else that will bolster your chargeback claim. 

One simple detail to remember is to return the item you purchased. This way, you can’t be suspected of chargeback fraud. Then again, with services and items that are consumable, it is harder to disprove friendly fraud, since the purchase can’t be returned. 

The chargeback process is a bit like a court case. Therefore, it is helpful to have an advocate in your corner that will present your case. 

Consult with Fund Recovery UK if you are trying to retrieve your funds. Talk to us and we will map out a strategy with effective tools and methods, such as intelligence reports, for fund recovery. Our professionals have a strong working relationship with banks and regulators and understand how to make a claim persuasive and successful. 

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