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Expert links contactless spending to rising chargeback fraud

Tuesday, September 15, 2020 — 07:24:57 (EDT)

London, UK. 15th September 2020: Monica Eaton-Cardone, COO and Co-Founder of merchant dispute specialist, Chargebacks911, and its revolutionary new financial institution brand, Fi911, warns of the chargeback and fraud risks associated with the increase in contactless payments following the COVID-19 outbreak.

In a bid to reduce human interaction, the use of cash, and the touching of contact points such as PIN pads and cash machines, the UK’s contactless spending limit increased from £30 to £45 in April this year.

Customers across the globe have also got onboard with the payment method following contagion concerns about using cash and cards. As a result, Mastercard reported a 40% increase in contactless payment activity in Q1 of 2020.

This dramatic increase in contactless payments may be contributing to the sharp rise in chargebacks that have been recorded since the pandemic began. According to Cardone, industries are now experiencing 10 times the amount of payment disputes that were taking place prior to COVID-19.

Monica explained: “Contactless payments present a number of fraud threats. For one, if a valid cardholder’s information is stolen, it can be added to a mobile device and used to make unauthorised purchases – leaving merchants covering customers’ losses. In addition to this third-party fraud, contactless payments present a greater opportunity for genuine customers to commit first-party (friendly) fraud and lie about whether or not a transaction was actually made by them.

“These scenarios pose even more of a threat while the retail landscape is going through this turbulent period and genuine claims are on the rise, so merchants are in less of a position to dispute false claims.”

Although merchants are the ones left refunding customers and losing valuable goods due to chargebacks and friendly fraud, the issue doesn’t start and end with them. Behind a payment dispute is an intricate network of merchants, acquirers, issuers, and card schemes that deal with disputes and adopt their associated costs.

And, when merchants lose money to disputes, the cost will inevitably end up back with customers, since merchants raise prices to cope with these losses. This is likely to become a necessity in our current period of economic uncertainty.

For this reason, Monica warns everyone involved in the payment process to remain vigilant when it comes to chargebacks that stem from contactless payments.

Monica continued: “If merchants want to reap the benefits of contactless payments, they need to be aware of the threats involved and have strategies in place to respond effectively.

“At the same time, financial institutions should watch for activity that is unusual and out of line with typical consumer behaviour – for instance, a consumer suddenly making a high-value purchase at a store that’s thousands of miles away from home. They should also be on the lookout for repeated use of the chargeback process, which might indicate friendly fraud, as 40% of consumers who commit this fraud successfully will repeat the practice within 60 days.

“I also urge consumers to be aware of their account activity and to keep a close eye out for anything that may indicate that a contactless payment account has been compromised.”

Going forward, Monica is anticipating that contactless payment adoption will continue to grow, especially against the backdrop of COVID-19. To help combat the growing chargeback problem and fraud associated with contactless payments, Chargebacks911 is working closely with merchants – particularly those in the most susceptible industries – and financial institutions to tackle the issue head-on.

If you’re concerned about COVID-19 chargebacks effecting your business, speak to a member of the Chargebacks911 team at: info@chargebacks911.com.

About Monica Eaton-Cardone

Monica Eaton-Cardone has worked for over a decade to educate merchants and financial institutions about hidden threats in the rapidly changing payment fraud landscape. Leading Chargebacks911, she established Europe’s first chargeback remediation specialist to tackle the GBP 80 billion chargeback fraud problem.

Monica is passionate about the need to educate merchants and financial institutions on risks that will only get worse if left unaddressed. She was one of the earliest and most vocal voices to warn of the hidden risks of friendly fraud, including how evolving consumer behaviour has caused a perpetual cycle of rising fraudulent actions.

About Chargebacks911

Founded in 2011, Chargebacks911 is the first global company fully dedicated to mitigating chargeback risk and eliminating chargeback fraud. As industry-leading innovators, the company is credited with developing the most effective strategies for helping businesses maximise revenue and reduce loss in a variety of industries and sectors within the payments space.

It provides comprehensive and highly scalable solutions for chargeback compliance, handling services and fraud strategy management. The company helps decrease the negative impact of chargebacks, thereby increasing revenue retention to help ensure sustainable growth for every member of the payment channel.

Chargebacks911’s unparalleled category experience and Intelligence Source Detection (ISD™) technology help identify the true source of chargebacks, optimising revenue recovery opportunities, mediating disputes, safeguarding reputations, and proactively preventing future fraud. chargebacks911.com

About Fi911

Fi911 supports financial institutions with innovative back-office management technologies created specifically for the banking and payments industries. By offering direct communications between FIs and their ecosystems, the company’s scalable payment product suite offers features that range from fast, flexible merchant onboarding to highly transparent and feature rich client portals.

Fi911’s proprietary DisputeLab™ helps make resolving chargeback disputes faster and more efficient by optimising each step in the dispute cycle. The company’s unified platform also provides threat detection, reconciliation, and risk management tools, as well as the ability to generate commissions and ISO pay-outs directly through the system.

Established by the dispute experts at Chargebacks911®, Fi911 offers global reach and expertise, as well as customised training and support from recognised industry leaders. fi911.com/

The Green Sheet Inc. is now a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals. Click here for more information: bankcardlife.com?orid=33533&opid=1 .

Source: Company press release. end of article

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