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KEEPING THE CHARGEBACK GRINCH FROM RUINING CHRISTMAS TRAVEL

Gabe McGloin, Head of Merchant Sales & International Business Development at Verifi

 

As we all turn our attention to Christmas travel, we are hoping for twinkling lights, Christmas markets and lots of joy. However, with some of the very public travel disasters that have hit the headlines this year –  Thomas Cook comes to mind – many travellers may be more cautious than normal.

The tour operator’s collapse earlier this year left more than half a million summer holidaymakers stranded overseas, with many unable to afford a flight back home – their trip of a lifetime turning into a waking nightmare. What’s worse, they had to pay for food and accommodation while waiting for rescue. One unlucky traveller was even billed an additional £2,500 by a Florida hotel after Thomas Cook failed to remit his original payment.

While failures of this scale are thankfully rare in the travel industry, such financial calamities are among the main causes of chargebacks – requests from consumers to reverse payments made from their debit or credit card. Few industries are as exposed to chargebacks as the travel sector; given the intense competition, minimising such losses needs to be an urgent priority for every business in the category. But why are chargebacks so common, and what can operators do about it?

 

Why travellers demand their money back

Whether in travel or perhaps any other industry, some people will take the opportunity to defraud financial institutions on their own legitimate purchases: the expensive camera that’s “stolen” and claimed on the travel insurance; the disputed restaurant bill for a meal that they swear they never ate, and so on.

In truth, fraudulent claims like these make up a small percentage of chargeback claims. More often it’s simply a case of forgetfulness behind transaction disputes, which may result in chargebacks from  consumers being charged for no-shows, charges for dining and minibar consumption, and retail purchases.

It’s only when people return after their travels and the January reality sets in that they open up their credit card statement and, with great surprise, see a list of transactions that they don’t recognise.

It doesn’t matter if people are making claims in good faith and honest forgetfulness. The cost of refunding or investigating these payments is a major drain on travel businesses’ resources, which is why they need to put themselves in charge of improving refund processes.

 

Striking a balance

Chargebacks aren’t just a matter of losing money, important as that is. It’s also a process that is fraught with reputational risk. If travel operators are too harsh, or too untrusting in their response to customer claims, they can make their customers feel like they’re being accused of lying – and victimisation is a poor basis for a long-lasting and loyal relationship.

That doesn’t mean that travel operators should accept each and every chargeback as the cost of doing business. On the contrary: they can take a number of proactive steps to help prevent chargebacks from happening – and, just as importantly, better protect their customers from genuine errors.

Good chargeback prevention practices are more than just a guard against fraud: they are an essential element of great customer service, where disputes are resolved quickly thanks to full access to comprehensive transaction records.

Investigating chargebacks can be difficult enough for your average merchant to achieve, but for the travel industry it’s even harder (and more expensive) since these transactions usually take place abroad. Given all the attendant difficulties of language, time differences and other complications, it makes much more sense for travel businesses to focus on prevention.

 

The data-sharing solution

Fortunately, there have been many recent innovations in the payments industry that makes it much easier for businesses to investigate transactions effectively. These include technologies that facilitate better and more timely exchange of relevant transaction or dispute data between merchants and card issuers, helping to slash the time required for resolving disputes.

The key to reducing chargebacks is much closer collaboration between travel operators and issuers throughout the entire dispute process. Implementing steps such as providing clear billing descriptors and fostering order data-sharing between merchant and issuer can make a massive difference to the whole process, especially in reducing dispute volume overall.

For example, the latest collaboration technologies enable issuer staff members to access transaction information from a travel company’s CRM system, and then use this to check disputed transactions quickly. They can also push near real-time dispute notifications so that the business can review and resolve disputes faster to reduce time, resources, and costs associated with the chargeback process.

These technologies don’t just save time and money through reducing chargebacks and streamlining the investigatory process. They also result in lower overall dispute volumes and, perhaps even more important, improved loyalty from the customers themselves. Even if disputes aren’t ruled in their favour, customers will appreciate the speed with which the query was resolved. Meanwhile, providing comprehensive information on the transaction will mean that customers won’t have cause to continue their complaint – bringing Christmas cheer to travellers and providers alike.

 

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NEW TECHNOLOGY PLATFORM REDUCES CLAIMS PROCESS FROM WEEKS TO MINUTES

CLAIMS

New platform has potential to cut fraudulent claims by almost half Decrease claims costs by as much as two thirds

 

Pact Global, an insurtech business, has launched an Artificially Intelligent (AI) Claims as a Service (CaaS) platform to help the General Insurance market significantly reduce fraud exposure, accelerate the claims process, enhance customer insight and significantly reduce the overall cost of handling a claim by up to 66%.

 

Mark Seddon, Founder and CEO of Pact, says what currently takes days or weeks to complete, can now be managed in minutes: “Our platform is better for the customer, as it makes the claims process much faster and easier, and also much better for the insurer, as it automates the whole process and minimises the time spent on claims management, a significant cost to the business.”

 

Focussing currently on travel, motor and property insurance, all Pact’s offerings use more than 50 separate data points during the claim validation process to verify the customer’s contact details and investigate their claims history.

 

Verification is supported by the use of AI, behavioural analytics, assisted intelligence and a purpose-built, face and voice recognition program. Employed at the First Notification of Loss (via a white labelled customer mobile and web app), it confirms the customer’s identity and detects whether expressions/behaviours or variations in speech might give cause for concern.

 

Pact enables the collation of all policies and schedule information for easy customer access, importantly allowing the platform to verify the claim against the policy for the insurer.  Relevant limits and schedule information are then known to be correct before the claim progresses.

 

For travel insurance claims specifically, the platform cross-references claims like cancellations and delay, to transport information (e.g. Flights).  Across all insurance types, checking weather patterns increases the likelihood of detecting fraud and helps insurers predict possible surges in claims:

 

“The platform is so intelligent that it can detect whether any images or videos, invoices, warranties and receipts uploaded have been used anywhere else in the world,” Mark continues, “and it’s all done within a matter of minutes.”

 

Alongside this, Pact has automated and simplified the process of dealing with third parties to obtain quotes, instruct workers, update claims status and verify job progress prior to invoicing, all accessible to both customer and claims handler through the app.

 

The platform can integrate into existing networks or be used to find local tradespeople or garages, supporting local communities. The open communication between worker, claim handler and customer reduces complications and allows the customer and/or claims handler to easily flag and resolve potential issues.

 

To further improve customer service, the mobile app features a Machine Learning Chat Bot called Ollie, which is designed to advise, assist and simplify the user experience. It delivers real time notifications, keeping claimants informed of their claim’s status improving customer service by 65%. It stores all policy information and T&Cs and can identify policy cover and limits. This increases customer awareness and creates upsell opportunities for insurers, buying or renewing with a single click.

 

Mark says that Pact has been built to deliver customer transparency and improve the experience with their insurer, ultimately building and cementing trust: “It is designed to significantly reduce the time and cost of handling claims for insurers, delivering real savings to the bottom line.  It’s win-win for company and customer.”

 

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CORONAVIRUS PANDEMIC, STORE CLOSURES, SHIFT CONSUMER BUYING BEHAVIOUR LEADING TO ACCELERATED DIGITAL TRANSFORMATION FOR MERCHANTS

CORONAVIRUS

Forter Issues First In A Monthly Series of Coronavirus Special Reports 


Forter, the leader in e-commerce fraud prevention, today announced the release of the Forter Special Report on the Impact of Coronavirus on Consumer and Fraudster Behaviour. The report provides merchants across industries with insight into trends seen within the $150B in transactions that Forter processes annually.

As the Coronavirus pandemic sweeps across the globe, government responses have included enforced social distancing and financial support to beleaguered economies. Merchants who sell non-essential goods have responded by closing physical stores, and in some regions also their online operations. Consumers have begun to shift their purchases, even those of essential items such as groceries, online.

The Forter Special Report tracks trends and spikes in consumer behaviour as well as innovative methods that opportunistic fraudsters take to prey on consumers during this unprecedented and unpredictable time.

“Merchants are scrambling to cut costs, reduce the impact of fraud, scale efficiently, and deliver a consistent customer experience to meet rising consumer online buying behaviour,” said Michael Reitblat, CEO and co-Founder of Forter. “The aftermath of the pandemic will accelerate digital transformation among merchants as consumer shopping habits adapt.”

Covering industries including travel, fashion and beauty, food and beverage, marketplaces, and more, The Forter Special Report uncovers consumer buying trends such as:

  • The travel industry has been extremely hard hit. Regional variations are appearing, in particular an increase in purchases of inbound international travel to China in the weeks before the country closed down inbound travel on 26 March. Data in the last month points to “optimistic travel” in which the travel date is 120 or more days following booking. Such bookings now account for 65% of travel purchases.
  • The food and beverage industry has seen a dramatic increase in online purchases. New accounts now represent 15-25% of all customer volume, compared to 5-7% prior to the pandemic. As merchants struggle to manage the increased volume and meet expectations of new customers, we are seeing an increase in service chargebacks.

Fraudsters are exploiting confusion and uncertainty caused by government and corporate policies:

  • As people adjust to working from home, Forter sees a marked increase in social engineering fraud, associated with fake emails purporting to be from HR and corporate addresses. Here fraudsters invite people to click for more information, instead taking victims to malicious sites.
  • With a shift to online shopping in Apparel and Accessories, we see an increase in gift card purchases. While a higher number of legitimate buyers usually means that fraud rates drop, gift card fraud rates have not. Fraudsters have noticed an increased demand of the completely virtual merchandise that is easy to monetise.

In its recent report, “Mitigate Coronavirus (COVID-19) Business Impacts With Digital Commerce (March 2020),” Gartner asserts that “the COVID-19 outbreak will negatively impact business performance in the short term as offline activities are cancelled and online orders overwhelm delivery capacities. Application leaders can mitigate the impact and ensure continuity of operations by accelerating digital commerce initiatives.”

 

“With more consumers experiencing buying online, we expect merchants who hadn’t considered e-Commerce as a viable platform to now try it,” continued Reitblat. “Merchants that had already adopted e-Commerce struggle to meet this increase in demand. Working collaboratively from home and hiring to meet the volume create obstacles for those who manually review transactions for fraud.”

Forter’s integrated fraud prevention platform delivers real-time decisions at every point of the customer journey from account sign up and login, to purchase, and to returns. The system is tailored for each merchant based on its unique business requirements, pairing merchant feedback with Forter’s expertise.

Forter’s growing Global Merchant Network includes over 620 million consumers globally and 97% of online US consumers. Links among known consumers and those new to the network allow the platform to infer trust, resulting in higher accuracy without the need to manually review transactions and interactions.

With the Forter platform merchants can expect an up to 90% reduction in false declines, recapturing otherwise lost revenue and delivering the best possible buying experience to their consumers, with an up to 90% decrease in chargebacks due to fraudulent activity. Forter allows merchants to scale and accelerate their digital transformation strategies even in an uncertain time.

“Rules based systems by their nature look at the past and adapt to it,” said Reitblat. “New consumer behaviours, which we’re seeing across industries, as well as new fraud behaviours, are missed by these systems until they can adapt. Forter’s identity-based system authenticates the buyer, not just the behaviour.”

Together with the Special Report, Forter has also issued its Eighth Fraud Attack Index, highlighting industry trends and innovative fraud vectors, showing the evolution of fraud, comparing H2 2019 to H2 2018. The report features the continued evolution of fraud attack vectors across all customer touchpoints, demonstrating the need to protect merchants’ digital offerings at all interactions in the customer journey, from account abuse to payment abuse to policy abuse.

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