February 28, 2024

New study reveals common chargeback misconceptions among consumers, costing retailers billions

12th January 2024/TAMPA, Fla. — Chargebacks911, an international chargeback management and prevention company, released the highly-anticipated findings of its 2024 Cardholder Dispute Index. This comprehensive study compiles insights from more than 4,000 consumers who have engaged in chargeback processes with their issuing banks in the past year.

Released in partnership with TSG (The Strawhecker Group), a leading analytics and consulting firm in the payments industry, The 2024 Cardholder Dispute Index sheds light on crucial trends, behaviors, and statistics that redefine the landscape of cardholder disputes and payment preferences among buyers.

“For years, we’ve been witnessing a significant rise in chargeback fraud and misuse within the world of payments, with up to 75% of all chargebacks being filed for illegitimate reasons,” said Chargebacks911 Director of PR Justin Clements. “In this report, we get a glimpse into the mind of the consumer to see what is prompting these invalid disputes so as an industry, we can develop solutions that address the root causes of friendly fraud and not just the symptoms.”

According to Chargebacks911, key revelations from the report include:

Millennials & Gen-Z Embrace Digital Banking

A notable shift in banking preferences is apparent among individuals under 35, who overwhelmingly favor managing finances via mobile apps and exhibit a threefold preference for mobile payments over traditional credit card transactions. This trend signifies an impending industry shift towards mobile-centric financial services as younger demographics mature and exert significant market influence.

Insights into Cardholder Disputes

For the first time, the 2024 Cardholder Dispute Index delves into the primary reasons behind cardholder disputes. Factors such as transaction recognition difficulties and convoluted return processes emerge as the top reasons compelling consumers to initiate chargebacks, offering invaluable insights for merchants seeking to mitigate disputes.

Disputes vs. Refunds

While 72% of cardholders view chargebacks as a legitimate alternative to merchant refunds, a substantial portion initiates chargebacks without prior merchant contact. The report explores the underlying motivations driving this behavior, illuminating aspects influencing cardholders’ preference for chargebacks over direct refund requests.

Gradual Growth in Mobile Wallet Adoption

Despite credit and debit cards remaining prevalent, the report indicates a growing preference for alternative payment methods. Approximately one in five consumers opt for alternate payment modes, with mobile wallet apps such as Apple Pay and Samsung Pay gaining traction, especially among younger demographics.

Americans Disputed $83 Billion in Credit Card Charges in 2023

The study highlights a staggering $83.569 billion worth of disputed charges in 2023, revealing an average of 5.7 chargebacks per cardholder, each valued at $76. This stark figure prompts contemplation about the prevalence of fraud, merchant abuse, and evolving consumer behavior impacting the chargeback process.

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