eConsumerServices Addresses Credit Card Issuer Woes: Chargeback Disputes Increasing, Costing Issuers $3.4 Billion

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Increased competition, smaller customer pools and a higher demand for round-the-clock customer service are having an increasingly negative effect on credit card issuers. eConsumerServices says an escalating number of chargebacks is the real culprit affecting the viability of credit card issuers - one that is costing issuers over $3 billion.

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Issuers are now faced with the additional expense of supporting round-the-clock customer support, and providing their customer base with a competitive product that boasts ‘consumer protection’ and ‘transaction insurance.’

Ecommerce has boomed in recent years, and B2C ecommerce sales are expected to reach $482.6 billion in North America in 2014 (1)—and with that has come a direct parallel of fraud-related chargebacks. Total global payment card fraud losses were $11.3 billion in 2012, and fraud-related chargebacks in the U.S. (the only country in which card fraud is consistently growing) accounted for 47% of that amount—alarmingly, card issuers lost $3.4 billion of the total losses (2). The increase in chargeback fraud is negatively affecting credit card issuers and increasing the costs of the services provided by the issuers to the consumers. eConsumerServices, a transaction dispute practice, states that it is important to educate issuers of the risks of filing chargebacks, as the associated costs eventually trickle down to their main customers: the consumers.

Issuers are in stiff competition for good customers, mailing 484 million credit card offers in May, 2011, alone to those most sought-after customers: those with good to excellent credit scores (3). But along with the increase in competition has come another emerging threat—chargebacks, which accounted for 41 percent of online fraud in 2011 (4). Chargebacks are carried out by credit card issuers and banks, which withdraw money for a transaction from a merchant’s account and return it to the consumer following a dispute. Once known as an ace-in-the-hole protection method for consumers, filing a chargeback now comes with consequences, as there is an increase in the number of merchants who are fighting back. Nearly one-third of merchants contest all chargeback claims filed, and 40 percent of those cases are won by merchants (4), resulting in an increased number of unhappy customers contacting their banks for answers—which, in turn, become cost centers for issuers, according to eConsumerServices CEO and co-founder Gary Cardone.

Cardone says that the average time it takes to process a credit card dispute is about 15 minutes, in comparison to the fraction of time it takes to complete the majority of other cardholder services. The increased time necessary for chargeback processing is due to the costly manual labor that is required: when a dispute is initiated, best practices include the issuer contacting the merchant to validate the claim (either through a phone call or written inquiry) in order to firstly validate the legitimacy of the transaction. Taking shortcuts on this process can lead to customer dissatisfaction—if an issuer fails to verify the dispute before starting the chargeback process, the cardholder may lose the right to the temporary refund they initially receive. In essence, not only do chargebacks cost more to handle, they create customer upsets and can ultimately destroy customer loyalty through the reduction of consumer accountability, per Cardone.

“Issuers are now faced with the additional expense of supporting round-the-clock customer support, and providing their customer base with a competitive product that boasts ‘consumer protection’ and ‘transaction insurance’—this takes away from the bottom line,” said Cardone. “And unfortunately, consumers are the ones to foot the bill.”

Consumers begin suffering from what’s been coined the “trickledown effect.” Altogether, the costs associated with chargeback disputes force issuers to increase their cost of services, which comes directly from the pockets of consumers, per Cardone.

“The dispute process can be difficult to navigate, especially for consumers who see the ease by which they can contact their bank for resolution—but the appropriate avenue is the assistance of an impartial mediator with sufficient experience to resolve the issue quickly, saving both time and money for every party involved.”

eConsumerServices acts much like a “third-party clearinghouse” among consumers, merchants and their banks. With multiple levels and tools, the company resolves transaction inquiries and reduces the threat of frivolous disputes quickly and with finality. This methodology results in a significant cost savings for issuers and acquirers alike, making it less risky for merchants and their consumers, while helping to streamline a very intricate, aging and complex process.

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About eConsumerServices:

eConsumerServices was initially formed in 2009, but was focused overseas in the European market. However, over the last 12 months, eConsumerServices has developed a market in the USA, and is picking up speed. eConsumerServices specializes in promptly resolving consumer problems as they relate to ecommerce purchases. The company was formed after its sister company, Chargebacks911, surveyed 2,100 consumers who had filed chargebacks, discovering that an overwhelming number of merchants’ customers who filed chargeback disputes went to their banks because the merchants didn’t offer a fast and efficient support option. Customers were looking for a place that would resolve their inquiry. eConsumerServices was created to serve such customers. Co-founder Monica Eaton-Cardone established eConsumerServices because she felt that it was important to have one company for merchants and one company for consumers. With this, the issuers would be kept out of the dispute—issuer involvement in disputes leads to higher costs, which eventually affect consumers. eConsumerServices is an online service that acts as a mediator between merchants and consumers in helping to resolve transaction disputes. To learn more about eConsumerServices and its services, visit

1.“Global B2C Ecommerce Sales to Hit $1.5 Trillion This Year Driven by Growth in Emerging Markets.” N.p., 3 Jan. 2014. Web. 13 Mar. 2014.

2.“Skimming off the Top.” The Economist Newspaper, 15 Feb. 2014. Web. 13 Mar. 2014.

3.Greene, Ilana. “Competition Between Credit Card Issuers Heats Up.” Business Insider, Inc, 14 July 2011. Web. 13 Mar. 2014. July 20, 2013. Web. Feb. 6, 2014.

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