Equifax Battles The Chargeback Deluge With AI And Digital ID

The trend toward the digital-first economy over the past year has meant that all businesses have become omnichannel by necessity. And after this flood of online commerce in the wake of the pandemic, one of the consequences may be a deluge of chargebacks.

Mark Luber, chief product officer for Equifax U.S. Information Solutions, told PYMNTS that merchants are likely to see a continuing wave of disputes and chargebacks as fraudsters look to leverage attacks on remote account creation, making illicit purchases and committing synthetic identity fraud.

“Going online has opened up a lot of opportunity and a lot of risk,” he said.

Those risks are reflected in the fact that stolen identity activity has risen dramatically, and that there are any number of vulnerabilities along the customer/business continuum. Most immediately, though, the volume of chargebacks is increasing as so much of commerce has moved online. Research from Kount (recently acquired by Equifax) shows that 40 percent of merchants have seen an increased percentage of chargebacks.

“It’s not just at the point of transaction where a loss might occur,” Luber said. “There are risks all along the customer journey.”

Companies, then, need to monitor all aspects of account creation and access, leading right into the transaction itself. Along the way, they can identify where there are pain points in the consumer experience — and determine when or where there have been misunderstandings over charges and where there truly has been fraud.

“It’s really important to manage the customer experience so the chargebacks that are outside of ‘true’ fraud can be managed appropriately and resolved, and create great customer experiences,” said Luber.

In this way, companies can learn from chargeback activity and identify where weaknesses exist as they examine their end-to-end workflows.

Luber pointed to the February announcement that Equifax had closed its acquisition of Kount, helping Equifax grow its footprint in digital identity and fraud prevention efforts. The deal, the firms have noted, will allow international companies to use artificial intelligence (AI) to analyze tens of billions of interactions, 17 billion devices and 5 billion transactions (measured annually) across 200 nations and territories. As PYMNTS reported, Kount will now be part of Equifax’s U.S. Information Solutions (USIS) business unit.

Differentiated Data

According to Luber, Kount has roughly 9,000 customers across 75 industries. He noted that “differentiated data with the layering of analytics and AI is how we create value … we know that we can bring together a great customer experience by looking at the volume and velocity and the graph of interactions that Kount brings, and then the financial services expertise from Equifax.”

That will help to increase trust that identities are in fact accurate, streamline account creation, and reduce chargebacks and false positives, he said.

For example, noted Luber, the emerging popularity of buy now, pay later (BNPL) offerings can leverage both companies’ expertise in what he termed an “unmatched omnichannel experience.”

“Every time you check out, every time you purchase something, it’s an opportunity to finance that purchase,” noted Luber. “The convergence of eCommerce and traditional financial services motivates us at Equifax to bring together that same perspective and Kount’s eCommerce capabilities to accelerate transactions with expertise.”

The combination of the two firms along with advanced data analytics will facilitate a high velocity of transaction flow, he said, while avoiding the friction tied to stepped-up authentication efforts.

“Now, as a company, we’re really skating to where the puck is going to be in the future to provide a solution that really democratizes that emerging trend of eCommerce plus banking,” said Luber.