Reduce Customer Disputes with Data Transparency

The digitisation of commerce has escalated the need for card-not-present (CNP) businesses to bring proactive customer communication to the fore. From digital receipts to high-tech AI chatbots, sellers have more options than ever to interact with customers. Not only will embracing these efforts heighten transparency, but also improve customer service and foster better relationships which plays an important part in preventing disputes, preventing disputes, and ensuring ongoing custom to the seller.

According to a recent report by KPMG, 90% of consumers regard a complete resolution of transaction issues as one of the most important qualities of great customer service[1]. Providing customers with clear information at the precise point they need it should be a central part of all companies’ dispute strategy, as resolving the issue early is in everyone’s best interest.

Keeping customers informed through proactive communication and delivering clear transaction information can lead to reduced friction in returns and refunds. Such efforts should be coupled with greater sharing of transaction data between seller and issuer, allowing purchases to be easily confirmed and understood. Clear but not invasive communication pre-empts disputes and can prevent the escalation of many far-reaching problems related to disputes.

Prevention is better than a cure

A company’s disputes strategy should feature preventive tactics at the presale experience. Sellers should ensure at the point of purchase that customers have all the appropriate information needed for a complete and satisfying purchase. Ensuring customers are making well-informed decisions is not only important as best practice, but a good measure to help minimise returns, refunds, and disputes.

At or before checkout, sellers should provide easy access to policies. Clear and concise terms & conditions allows customers to understand their rights and what is expected of them. Likewise, returns & refunds policies should outline the procedures for customers to take in the event a product or service does not meet their expectations. Subscription services must also be clear around commitments and cancellations. A key area of needed clarity is in the scope of free trials: unclear rules can leave customers feeling cheated when they see an unfamiliar charge on their billing statement. To avoid disputes, service providers should clearly outline the end date at the outset and remind customers at the appropriate time of the pending close of the free trial period.

By giving customers clear information about their rights and available actions up front, confusion and speculation leading to disputes may be reduced. In the unfortunate event a dispute does occur, clearly presented presale terms and customer purchasing history can provide sellers with important compelling evidence for successful representment and recovery of funds from unwarranted chargebacks.

Did I buy that?

Unrecognised transactions can often lead to consumers disputing charges with their issuer. Far too often, customers contact their bank to submit a dispute, simply because they do not recognise transactions on their statement. This type of activity is a key driver of friendly fraud. Research shows that 77% of heavy online shoppers who reported a problem transaction on their statement are in favour of having access to enhanced transaction details. In fact, 75% of credit card users will do research on an unrecognised transaction before they call their issuer (83% for debit card users). It should also be noted that 25% of calls to the issuer could be prevented with clearer seller transaction descriptors on billing statements[2]. The ability to effectively head off confusion around transactions is the most cost-effective way to reduce customer disputes.

After the point of sale, proactive and continued communication is key to reducing disputes. Sellers should follow transactions with purchase confirmation and transaction details via email or text. If possible, confirmation should include business name, contact information (email, phone), purchase amount, date of purchase, item(s) quantity and descriptions. Also, if applicable, sellers should provide tracking and shipping information and receipt confirmation of goods/services. These standard practices should leave customers no doubt about the purchase they made, as well as instil confidence in the sell with whom they have conducted a transaction.

Sellers must embrace technology in their communications with consumers. In a recent survey, 60% of customers thought a digitally posted picture of the printed receipt would be most helpful in validating a transaction[3].

Despite best preventive practices, some disputes are inevitable. Sellers that provide data transparency throughout the sales process – maintaining all documented communications and records of customer purchase history and behaviour – can provide compelling evidence to build effective dispute responses for improved revenue recovery.

Reduce disputes with collaboration

To be most effective, all communication should be coordinated across consumers, sellers, and issuers. By practicing transparency and opening the lines of communication, consumers can self-resolve disputes or address them directly with sellers. Sellers can share information with issuers, so issuers can deliver vital purchasing data to their customers, thus minimising customer confusion that could result in disputes. Such collaborative technologies are now coming into the payments ecosystem, fostered in large part by major card brands. 

It isn’t just sellers that benefit by supporting data transparency for their customers. 70% of customers contact their issuer's call centre at some point in the dispute process[4]. This creates an unnecessary workload for issuers, as many questions and disputes could have been expediently handled by the seller by providing their customers with essential transaction information.

Data-sharing solutions enable sellers to provide purchase information to card issuers, which in turn can be delivered to customers through online banking channels or reviewed by customer services personnel at the point of transaction inquiry. Not only can these services help prevent unnecessary disputes, but also provide a more enhanced experience for customers in the post-transaction phase of the payment lifecycle.

Don’t lose touch

Dispute strategies should be underpinned by efforts to build a bridge of trust with your customers – using email, text, digital receipts – which includes, and in some ways depends on, issuer collaboration. Embracing digital alternatives is key; as multichannel retailing becomes commonplace, so should multichannel customer service.

[1] Customer experience in the new reality, KPMG

[2] Aite Improving the Dispute Experience May 2020

[3] Aite Improving the Dispute Experience May 2020

[4] Javelin Report - Optimizing Dispute Strategies / October 2020