Where there are credit card transactions, there are disputes. That’s especially true of transactions that happen in a card-not-present environment (as is increasingly the case), and where fraudsters are able to use a range of tactics to make off with unauthorized transactions.
Ferreting out fraudulent activity and resolving disputes are complex challenges for credit unions (CUs). In recent months, payment networks Visa and Mastercard have changed their claims resolution processes, seeking to shorten the disputes life cycle, in part, by requiring more information and revamping chargeback reason codes.
For the issuers, new regulations and dispute practices can create both challenges and opportunities to identify and prevent “friendly fraud,” and allay cardholder concerns when disputes do arise — even cementing relationships with customers in the process.
In an interview with PYMNTS, Jack Lynch, chief risk officer and president of CU Recovery & The Loan Service Center at PSCU, and Jim Schlegel, vice president of marketing, sales and delivery at Lean Industries, both said that technology can simplify the disputes management process, leveraging data to clarify why transactions may be legitimate (or not). Streamlining the disputes process can also cement the trust that has been the hallmark of consumers’ relationships with credit unions, they said.
As Lynch noted, the digital transformation of financial services has spurred consumers to expect speed in transactions, and for it to be a hallmark of dispute resolutions.
“Transactions are increasing online as opposed to in-store purchases,” he said.
In addition, he noted, a broad swathe of goods and services are purchased online, such as digital media and gaming, with cards loaded onto various devices. Keeping track of it all can be a challenge.
At times, consumers may think transactions are fraudulent when in fact they are legitimate. Against this backdrop, Lynch said that using technology to process disputes can remove manual tasks and, with increased visibility, help consumers gain insight into their own online activity.
As he pointed out, the data fed through risk and analytics platforms can provide benefits beyond dispute management. Historical dispute data can be used to pinpoint fraud trends, such as bad actors shifting to different channels.
Schlegel noted that simplifying customer engagement tackles a critical human aspect of dispute management: “People have an emotional experience when they feel they need to raise a dispute. The emotion is borne out of the fact that something went wrong — or something has been misunderstood or miscommunicated. Right away and up front, when someone needs to tell their story, they want to know they are being heard.”
He said the effective use of data can help the CU convey information that the consumer may not have readily available, such as when the transaction took place, as well as how, where and to whom it was paid. With that data in hand, credit unions can make a programmatic decision on how to proceed, such as issuing provision credits, updating account statuses or requesting resolution with the merchant, Lynch and Schlegel explained.
“Every step of the way,” said Lynch, “members see that the process is being worked on, through their mobile device or whatever way they want to communicate.”
Both Lynch and Schlegel noted that the legacy tools in place through financial services — and credit unions — may not adapt well to the changes taking shape in claims resolution. To that end, PSCU said earlier in November that it has selected Lean Industries to help deliver what is billed as an optimized disputes management platform geared toward credit unions.
In the announcement, the companies said that Lean Industries’ AdjustmentHub and NetworkHub — which simplify the oversight of customer engagement, risk analysis and compliance — will serve as key components of PSCU’s back-office automation efforts. The Lean solutions will also integrate with PSCU’s recently announced engagement with NICE Actimize's ActOne Extend, profiled previously in this space.
As Lynch told PYMNTS this week: “The more information we can have at our fingertips in this age, the more we can help the cardholder in terms of resolving and making it a better experience all the way around.”