Clearing up the confusion around friendly fraud

With friendly fraud on the rise, issuers can now access a comprehensive solution to mitigate disputes over legitimate transactions

Chargebacks have always been a concern in the payments industry, but one subcategory in particular is rising at an alarming rate. So-called “friendly fraud,” where cardholders dispute legitimate charges on their statements—either unwittingly or knowingly—has intensified in recent years, to the point where issuers and merchants need an effective way to stem the growing costs.

As ecommerce and card-not-present volume has grown, so have disputes lodged by consumers who claim they don’t recognize an item on their statement. This form of friendly fraud is referred to as “transaction confusion.” This is often caused when merchants might use holding company names as an identifier, rather than their more familiar brand name. In other cases, people often find it challenging to remember a transaction from over a month ago given the rise in the number of card payments consumers now make. And if one account has multiple users, it can be difficult for the primary account holder to keep track of everyone’s transactions. In these situations, many people call their bank to dispute legitimate transactions.

Integrating effective solutions, seamlessly

Thanks to the speed of the cloud, application programming interfaces (APIs), and longstanding payments relationships, TSYS can offer best-of-breed solutions to enhance the consumer experience, and help issuers tackle challenges and make processes more efficient. To address the problem of friendly fraud, TSYS has partnered with Ethoca, a Mastercard company, to integrate Ethoca’s Consumer Clarity^TM product with TSYS’ systems. Consumer Clarity is a suite of features that allows merchants and issuers to provide more insight to cardholders about their purchases. It can also deliver greater insights across an issuer’s transactions—regardless of the card-brand or payment type used to make a purchase.

Using a versionless API and Consumer Clarity, TSYS has created its Transaction Enrichment Solution to easily integrate with issuer banking apps, giving consumers real-time access to digital receipts with itemized purchase details as well as merchant information like a clear merchant name and logo, and even location of the purchase. Cardholders can even tap on a transaction to see a digital receipt, where available.

The Transaction Enrichment Solution will deliver greater purchase transparency to cardholders, helping reduce some of the situations that cause first-party fraud disputes. Additionally, issuers should see a reduction in call center usage as consumers can self-serve to learn more about their transactions.

Enhancing the consumer experience, while reducing call center volume

This integration reduces friction by making it easy for customers to digitally check on their recent transactions. This can also help reduce call volumes, since cardholders can easily view the details of a purchase, and won’t need to contact their issuer to verify a confusing transaction, or worse, dispute a purchase they don’t recognize.

And for customers that do call in, the next layer of defense for issuers is the Ethoca Consumer Clarity Call Center, where issuer representatives can access more in-depth purchase details to help solve customer inquiries quickly, and on the first try. This also helps merchants often avoid low-dollar write-offs, allowing them to present reassuring evidence that a transaction is correct.

How technology transformed how we access merchant data

The industry problem of inadequate merchant data was in part due to storage issues. Storing receipts historically took up too much memory to practically incorporate all the information. Merchant data had to fit into just a 23-character field that ended up as a line-item on statements.

Transmission of the data was another issue. Twenty years ago, the thought of being able to scan a receipt, store it, and send it around the globe was unimaginable. It was too much data to move in too short of a time, and storage costs were too high.

Over time, storage costs plummeted, processing power skyrocketed, and analytics got much better. It’s a critical confluence, because Ethoca’s Consumer Clarity has to search and organize more than 14 terabytes—or 14,000 gigabytes—of transaction data and be able to retrieve it from anywhere in the world within milliseconds.

Advanced cloud computing helped Ethoca build out a worldwide network allowing issuers to easily scale to 100,000 transactions per second or more. And Ethoca’s Consumer Clarity is now seamlessly integrated with TSYS’ systems creating the Transaction Enrichment Solution.

Leaning into the ease of doing business

It’s all a part of TSYS’ solutions-driven approach and digital engagement strategy. TSYS and Mastercard are partnering to make it easier for issuers of all shapes and sizes to get access to the latest fraud fighting technology. By making merchant details and digital receipt technology available to consumers, it simplifies the process for many issuers who rely on TSYS systems daily to manage their fraud solutions.

It’s all about leaning into the ease of doing business, of being agnostic to various platforms, and filling in gaps. And, by doing so, we’re making the lives of our customers and their cardholders a bit easier.

¹ https://developer.mastercard.com/consumer-clarity/product/ethoca-consumer-clarity/