23% of consumers admit to committing ‘unintentional fraud’ when disputing a transaction

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what happened

According to Sift’s Q4 2022 Digital Trust & Safety Index, a whopping 23% of consumers admitted to disputing the purchase as fraud, even though they received the item and were happy with the purchase. I was. This is commonly known as unintentional fraud or first party fraud because the cardholder is committing fraud. The average chargeback in 2022 was $192.53. The Merchant Fraud Journal expects chargebacks to cost merchants more than $100 billion in losses in 2023.

So what

Credit and debit cards have a dispute process for cardholders to report problems with their transactions. Valid reasons for objection include:

• Fraudulent Billing: Someone used your credit card without your permission.
• Billing error: The merchant has billed me incorrectly. For example, let’s say you canceled your gym membership but were charged the next month.
• Purchase issues: This covers undelivered orders, quality issues, and other purchase issues.

Some consumers have used these protections to receive fraudulent refunds. In a press release announcing the findings of the study, Sift Trust and Safety Architect Brittany Allen said:

Unintentional fraud is a source of frustration for businesses as they lose money when customers file chargebacks. It also affects shoppers as merchants have to raise prices to account for fraudulent disputes.

Visa has announced that it will update its dispute program on April 15, 2023 to help merchants fight unintentional fraud. While this is designed to limit fraud, changing the dispute process to help merchants can make it more difficult for consumers to make legitimate card disputes.

So

Dispute resolution provided by credit and debit cards is a valuable protection for consumers. If you’ve been scammed or have a problem with your purchase, you can get your money back. However, it is important to know when and how to dispute charges.

If you see a fraudulent charge on your credit card, first double check that it’s fraudulent. The company name on your credit card statement may not always match the store name. This can make legitimate purchases look like fraud. If you are certain that you did not purchase the item, you have good reason to dispute it.

For any billing errors or product issues, please contact the seller first to see if we can resolve your issue. Some consumers are unaware of this, but unless it is a scam, you should contact the seller before disputing the transaction. You can file a dispute and let the credit card company take the lead.