The State of Chargebacks 2018
Fraud and risk management solution Kount and Chargebacks911 released the 2018 State of Chargebacks Survey, and provides some really interesting insights on fraud within the Card Not Present (CNP) channel and some very useful data on chargebacks, disputes and win rates.
The report found that while most merchants are actively disputing chargebacks (82%), 10 percent are in excessive chargeback programs and almost one in four (24%) state they had no idea what their actual win rate was when it came to those disputes. Organizations in the Event Ticketing, Apparel/Accessories/Jewelry, Home/Kitchen/Pets/Toys and Travel/Entertainment/Leisure industries have the lowest chargeback rates, with at least half of these organizations reporting chargeback rates of 0.5 percent or less.
Merchants are having some success disputing chargebacks however. Of the 82 percent of surveyed organizations that reported they are actively disputing chargebacks, one-fifth of merchants are winning less than 15 percent of their dispute cases and more than one-third win less than 30 percent of their disputes.
What is the most common type of fraud?
According to the report, nearly half of respondents overall (48%) claimed CNP fraud was their biggest source of chargebacks, followed by friendly fraud (28%), account takeover fraud (7%), and merchant error (4%). Meanwhile, 12 percent of organizations reported that they don't know the cause of the majority of their chargebacks.
The two most cited challenges with chargebacks were disputing them (59%) and being able to identify friendly fraud (58%).
There is some good news.
Most of the organizations surveyed (88%) deploy multiple tools or services for fraud and chargeback prevention, with more than three-quarters using three or more fraud fighting features or technologies, and nearly two-thirds using four or more. The most used fraud fighting techniques include Address Verification Services (AVS) (62%), Card Verification Value (CVV) (62%), Disputing or representing chargebacks (42%), Email verification (42%), Decline/Negative Lists (38%), Velocity Limits (37%), Phone Number Verifications/Reverse Lookup (31%)..
"Chargebacks within the CNP channel are a growing concern among online merchants," said Brad Wiskirchen, CEO of Kount. "This inaugural report was important for the industry to understand the state of the market today, the current challenges that merchants face, and the fraud technology and tactics that they are deploying to combat chargebacks."