Fraudulent card not present transactions are on the rise: protect revenue with efficient dispute management
A rise in fraud involving card not present transactions following the EMV chargeback liability shift on October 1, 2015, was widely expected by the financial industry. Other countries that implemented EMV previously, such as Canada and the U.K. experienced a similar effect, and experts wisely predicted the same would happen in the U.S. The reason is simple; when in-store fraud becomes more challenging and less rewarding, fraudsters notoriously focus on the online channel to continue their illegal operations. The data rolling in not quite a year after the liability shift is proving that prediction to be true.
It may appear that the adoption of EMV in the payments industry is helping ease the fraud liability for financial institutions, due to the overall reduction of card-present fraud combined with the liability shifting to merchants. However, with the rise in card not present fraud, the overall financial impact of fraud remains a chief concern for both banks and credit unions alike. According to a recent Global Fraud Attack Index, attacks on online merchants in the U.S. rose by 215 percent overall in 2015, with an 11 percent increase since October 2015 alone. Now is certainly not the time to relax when it comes to fighting fraud.
No financial institution wants to see the cost of fraud rising. But the true cost of rising fraud rates isn’t limited to just operational costs and fraud losses. The real danger is the potential reduction in cardholders from the institution’s portfolio that can arise when fraud is handled inefficiently. Cardholders expect quick and satisfactory resolution when they experience card compromise. And an institution that doesn’t deliver that resolution may lose business and the coveted brand loyalty they crave.
One very important tool that financial institutions can leverage to avoid cardholder attrition is an automated dispute management system that streamlines the chargeback process on behalf of their cardholders. With the fraud rate soaring and competition over wallet share more cut-throat than ever, handling disputes exclusively in-house is becoming more and more antiquated. Many financial institutions are now relying on advanced third-party technologies and staff to help remove the complexity from dispute management.
A comprehensive dispute management system can efficiently manage all disputes with one system and has the scalability to adapt to changing regulatory requirements. An automated process can help eliminate common manual errors, decrease the dispute lifecycle, and even improve customer satisfaction. Replacing a cumbersome paper-based manual process with an automated, paperless and intelligent system returns big rewards when it comes to speed and efficiency.
Some third-party recovery solutions like Vantiv’s Resolve Ultra, even come with the option to outsource the entire process including the initial cardholder contact. With Vantiv handling the process start to finish, the cardholder has minimal involvement and gets a much quicker resolution. And for those financial institutions who prefer to keep some of the process in house, Vantiv Resolve’s highly specialized recovery experts provide invaluable support and customized guidance.
Whether your institution needs a little dispute management support, or a lot; putting resources and expertise in place to handle the ongoing influx of fraud is an important strategy for the future. Ask your payment partner for more information on advanced chargeback recovery technologies. Or contact Vantiv for more information about our full suite of fraud solutions for financial institutions.