Latest news with #chargebacks
Yahoo
17-07-2025
- Business
- Yahoo
Chargebacks persist as court voids FTC rule
This story was originally published on Payments Dive. To receive daily news and insights, subscribe to our free daily Payments Dive newsletter. The death of a federal 'click-to-canel' rule by a court ruling this month means consumers peeved about recurring charges will have one less defense, say some industry experts who see parts of the payments refund process as woefully outdated. Merchants, meanwhile, contend with billions of dollars in disputed payments each year as customers submit chargeback requests. The Federal Trade Commission rule mandating that merchants ease their cancellation processes might have reduced some chargebacks, some experts said. In October, the FTC under the Biden administration passed changes to the agency's Negative Option Rule, with both Republican commissioners and multiple business groups opposed. The rule 'sought to impose requirements that would put consumers in a better position, and an aftereffect of that would have likely been less confusion or less alleged confusion, and therefore less disputes and chargebacks,' Zach Lerner, senior legal director at law firm ZwillGen, said Tuesday in an interview. The rule update – which would have covered recurring payments such as magazine subscriptions, health gym memberships and streaming services – also included recurring charges between businesses. The action drew several industry lawsuits, partly because of the rule's broad sweep and vague language in the now-defunct rule, Lerner said. On July 8, the Eighth Circuit Court of Appeals vacated the rule, finding procedural fault with how the FTC enacted the changes. 'While we certainly do not endorse the use of unfair and deceptive practices in negative option marketing, the procedural deficiencies of the Commission's rulemaking process are fatal here,' the three-judge panel said in its opinion. The FTC has no comment on the court ruling or potential next steps in the matter, an agency spokesperson said in an email last week. The court's ruling was 'very disappointing,' Ruth Susswein, director of consumer protection for Consumer Action, said in a July 10 email. However, she added, 'I'm heartened by the fact that the court ruled against the process used to create the rule, rather than the arguments made to protect consumers and prevent customer manipulation.' The Health and Fitness Association, which filed an amicus brief in the federal litigation, welcomed the appeals court's ruling in a July 8 press release. HFA members 'are fully committed to advancing consumer-friendly cancellation policies,' the association said. We believe strongly in transparency and ease of use, and we are actively working to support policy solutions — especially at the state level—by partnering with lawmakers to enact clear, reasonable laws that make it easier for consumers to manage their memberships without imposing rigid or unworkable mandates on businesses.' Absent the FTC rule, 'states will continue to fill the void,' said Lerner, who works in Washington and advises merchants. 'Certain states in particular will look at what just happened to the negative option rule, and say, 'We really need to do even more.'' The relationship between card chargebacks and the various state and federal laws that touch on recurring charges is murky, said Monica Eaton, chief executive of Chargebacks911, a dispute-management software company that works with acquirers, large merchants and card issuers. The growth of chargebacks was fueled by a surge of online commerce during the COVID-19 pandemic, and is still outpacing retail sales, she said. Consumers typically use a bank's mobile app or website to quickly dispute a payment, avoiding the need to use phone, chat or email contacts. 'How can we get the consumer to build a relationship with the business they're purchasing from instead of just going straight to their bank?' Eaton said July 10 in an interview. More than three-quarters (76%) of consumers skip merchants and dispute charges directly with their bank, according to a survey of about 1,200 people in the U.S. and UK by Chargebacks911 released Tuesday. Almost 9 in 10 consumers said they trusted their bank to resolve disputes quickly, the survey found. 'Customer loyalty is being reinforced not through direct merchant engagement, but through repeated satisfaction with bank-mediated outcomes,' the company wrote about the findings. Another reason consumers turn to bank-dispute methods is because they consider charge disputes 'as simply an alternative to traditional refunds,' the report said. U.S. merchants face about $170 billion in 'chargeback fraud and misuse' each year, according to Chargebacks911, which has its U.S. headquarters in Clearwater, Florida. Billing descriptions also play heavily into chargebacks, with 40% of those surveyed saying they often don't recognize charges because of confusing or incomplete descriptors denoting a payment, according to the survey. 'We don't need to stop the amount of chargebacks, we need to retool the way this (process) works,' Eaton said. Recommended Reading How active shooters pay for guns Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
27-06-2025
- Politics
- Yahoo
Board of elections approves chargebacks
JEFFERSON — The Ashtabula County Board of Elections approved chargebacks for the May election at a meeting Thursday morning. Board of Elections Director John Mead said the total for chargebacks for the election was a little over $118,000. The total costs for all levies in the county was a little over $80,000, with the remainder of the cost paying for the statewide issue on the ballot. The two county-wide issues for the election, levies for senior services and the county Mental Health and Recovery Services Board, both cost around $36,000. Mead said the board is aggressively looking for new poll workers. Board of Elections Deputy Director Charlie Frye said the board has had trouble conducting election outreach on social media. 'We actually went and announced on Facebook that there was an election, and Facebook put us in jail,' he said. The Ohio Secretary of State's office could not help the county board of elections with the issues it was having, Frye said. 'Right now, we're chasing new registrants,' he said. 'We targeted all the Democrats in the county, because we're a little more deficient on Democrats than Republicans.' The office is trying to outreach to Democrats who voted in the 2018 and 2020 primaries, he said. The board of elections is setting up a mock election for the week of August 25. The election will be for juniors and seniors at St. John School, A-Tech and Geneva, Edgewood and Grand Valley high schools. There will be one machine in each school. Frye said the board will use the event to get students registered to vote, and to recruit poll workers. The board of election's next meeting is planned for 10 a.m. Aug. 13. The filing deadline for the Nov. 4 election is Aug. 6, Frye said.
CTV News
26-06-2025
- Business
- CTV News
Securities regulator proposes ending chargebacks in distribution of investment funds
A magnifying glass enlarges the holographic image of Parliament Hill's Peace Tower on a $20 bill issued by the Bank of Canada, shown in a display case at the Bank of Canada Museum in Ottawa, Wednesday, Sept. 4, 2024. THE CANADIAN PRESS/Justin Tang TORONTO — The Canadian Securities Administrators is proposing to stop the use of chargebacks in the distribution of investment funds. The regulatory group says investment dealers sometimes receive an upfront commission or payment when their client buys securities. It says chargebacks happen when those clients redeem those securities before a fixed schedule, requiring the dealer to pay back all or part of the upfront commission or payment. The CSA says it's concerned that poses a conflict of interest as it may incentivize advisers to prioritize their own interest over that of their clients. CSA chair Stan Magidson, who also is chair and CEO of the Alberta Securities Commission, says the proposed amendments prioritize investor protection and foster fairer compensation practices. The council of the securities regulators of Canada's provinces and territories has published the proposed amendments for a 90-day comment period, which closes on Sept. 24. --- This report by The Canadian Press was first published June 26, 2025.
Yahoo
26-06-2025
- Business
- Yahoo
Securities regulator proposes ending chargebacks in distribution of investment funds
TORONTO — The Canadian Securities Administrators is proposing to stop the use of chargebacks in the distribution of investment funds. The regulatory group says investment dealers sometimes receive an upfront commission or payment when their client buys securities. It says chargebacks happen when those clients redeem those securities before a fixed schedule, requiring the dealer to pay back all or part of the upfront commission or payment. The CSA says it's concerned that poses a conflict of interest as it may incentivize advisers to prioritize their own interest over that of their clients. CSA chair Stan Magidson, who also is chair and CEO of the Alberta Securities Commission, says the proposed amendments prioritize investor protection and foster fairer compensation practices. The council of the securities regulators of Canada's provinces and territories has published the proposed amendments for a 90-day comment period, which closes on Sept. 24. This report by The Canadian Press was first published June 26, 2025. The Canadian Press Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Finextra
20-06-2025
- Business
- Finextra
Issuers must take urgent action against fraud as chargebacks escalate: By Frank Moreno
Recent data shows that issuers and merchants are struggling with rising chargeback abuse. With all indicators pointing to the already considerable problem growing by a further 24% by 2028, financial institutions (FIs) must act or risk losing both customers and profits. According to the Mastercard's 2025 State of Chargebacks report, abuse of chargebacks is a rapidly growing problem, with both merchants and FIs taking a significant hit. And things are about to get worse. Worldwide, issuers and merchants have seen a 10% increase in chargeback volume in the past year. This rise has been driven by a rapid growth in digitization as consumers lean into the convenience of e-commerce. In addition, the ease of disputing transactions at the click of a button has seen FIs in both the U.S. and UK experiencing a 30% to 40% increase in consumer dispute volumes via their digital channels. In fact, the report suggests that over the next five years, global chargebacks volume is set to grow from $261 million in 2025 to reach $324 million in 2028. For the U.S., this means chargebacks will total a staggering $20.47bn in just three years. For issuers, the picture looks even bleaker. Globally, only 28% of their chargebacks are legitimate disputes, while a whopping 72% are fraudulent (59% being third-party fraud, while 13% is first-party fraud). Card issuers face a complex set of challenges One of the biggest challenges facing FIs when it comes to third-party card-not-present (CNP) fraud that fuels chargebacks is aging infrastructure. Legacy systems are limited in their ability to handle this type of fraud due to outdated architectures, fragmented data, and reliance on rigid rule-based detection. Many systems are also still heavily reliant on manual investigation processes. Tracking fraud is another major headache. The same research found that not all FIs track whether the fraud is first-party or third-party. Misclassification and underreporting could lead to inadequate response strategies and higher operational costs, with FIs burdened by time-consuming and expensive investigations. In fact, some FIs report that they need one full-time employee for every $13,000 to $14,000 in incoming annual cardholder disputes. Issuers can attest: first-party fraud is especially hard to pinpoint. What's more, the cardholder's history may show no prior suspicious activity. Responding to a customer dispute by suggesting that they are lying or committing fraud will hardly help FIs maintain good relationships with their hard-won customers. In the U.S., for instance, FIs and merchants only win around half of their disputes and, in the absence of forensic proof, they are likely to issue the chargeback – even if the suspicions are valid. Take action early to avoid future pain Many Fis may not be aware what a significant role an effective 3DS program could play in the fight against chargebacks. Stopping fraud at the point of authentication is the low-hanging fruit in reducing the cost of chargebacks. With the right 3DS access control server (ACS) and modern authentication methods, FIs can combat first-party fraud with forensic proof that the transaction was legitimately authenticated. Moreover, they can tackle third-party fraud by simply detecting fraud more effectively – without adding friction. To reduce the impact of first-party fraud, cryptographic device binding technology is able to link each customer's account to a specific device and app, creating a unique digital signature for every transaction. This allows FIs to prove that a transaction was performed from the legitimate user's device, enabling banks to present strong, tamper-proof evidence to refute first-party fraud claims. To battle third-party fraud, 3DS programs that harness risk-based authentication (RBA) and low- or no-friction authentication methods empower FIs to use strong security that improves the cardholder experience and increases transaction success. However, an FI's 3DS approach should be part of a broader, multi-layered fraud prevention strategy that includes context-aware authentication not only to detect fraud across banking and payment channels more effectively, but also to recognize customers across channels to deliver consistent, streamlined experiences. Creating a better experience There has never been a more urgent time for FIs to consider how to update their chargeback reduction strategy. 3DS is an under-appreciated tactic in that regard. If issuers or merchants are concerned that fraud prevention will add friction that negatively affects transaction success, they are using the wrong fraud prevention authentication tools. Automated tools and AI learning models can help eliminate overall friction for consumers and improve the digital experience, while also providing more effective fraud detection. With robust authentication and clear transaction context, it becomes possible to dramatically reduce fraud and increase transaction success rates. While chargeback abuse and fraud are persistent challenges, new opportunities are available to issuers to combat increasingly sophisticated attempts in their earliest stages with the right combination of 3DS solutions, risk insights authentication, and modern authentication methods. FIs must act now – failure could risk further eroding already pressured margins, and customers looking to competitors that deliver more secure and user-friendly payment experiences.
