Getting the Most in Compliance and Customer Experience Out of Card Claims and Disputes

Billing disputes are the most common complaint related to consumer card products in the CFPB’s consumer complaint database. Disputes and claims of ID theft and fraud make up 24% of all consumer card complaints, and not surprisingly the CFPB has been increasingly focused on card disputes, claims and chargebacks, says Scott Andrick, Pegasystems’ industry principal for card and retail banking.

“A couple of years we never heard of banks sweating about Regulation E [which governs card disputes, claims and chargebacks],” Andrick shares. “The regulators are enforcing this more… and chargeback is a back-office function, where there hasn’t been a lot of investment in technology. But investing in the technology will cost less than a fine.”

For More of Our CFPB Coverage: [CFPB's Cordray: Our Regulations "Are Not Anti-Free Market"]

Issuers face a complex challenge in handling disputes and claims across different signage and PIN networks. Each of the networks has its own rules regarding chargebacks. Gathering the correct info upfront across all the different payments networks and across different channels is difficult for most issuers. And many banks are still handling claims and disputes manually, opening the door for manual errors, Andrick comments.

Many banks are also losing money on chargebacks, he adds. “Banks are trying to be aggressive with compliance by giving more chargeback credits than necessary to give themselves a cushion for when they get audited.”

Better technology that automates the processing of claims and chargebacks can help issuers untangle this complexity, Andrick says. “You want to have a system that manages compliance for you, and have your employees walt through a process for claims and disputes,” he notes.

This will help banks save money in the call center by reducing additional points of contact with the customer after the initial dispute or claim is made, he adds.

Pegasystems recently launched an updated version of its own Smart Dispute solution, which delivers automated and rules-based disputes and claims resolution. Automation helps reduce the number of contacts with the customer and helps employees recognize what information is needed for resolution upfront.

“Different networks require you to gather different data. You want to gather the minimal info and ask the appropriate info for each network and then automate the process from there,” Andrick remarks.

After the initial information is gathered, automated processes can recognize when the bank or customer needs to follow up and send additional correspondence, he says. An automated system can also act as a backstop in case the issuer misses a step in the processing and resolution of a claim by automatically crediting a chargeback to the customer’s account if that happens.

In addition to gaining compliance, an automated system can also improve customer experience by making the process easier for the customer as well. “A claim processed on the fraud side is a key customer experience moment of truth. The customer is coming to you in a moment of need… this is an opportunity for the issuer to show this is about doing the right thing,” Andrick observes.

Clearly given the number of complaints received by the CFPB banks are struggling to deliver a good customer experience when disputes or claims are made. But with increased competition from non-bank entities, such as T-Mobile’s recent entrance into the market, banks can’t afford to afford to let their customers walk away because of bad service, Andrick notes. With a good case process architecture, data regarding customer claims and disputes can be shared across different systems, channels and organizational silos, enabling the bank to deliver a seamless experience for any customer going through a dispute or claim, Andrick recommends.

“This is an opportunity to solidify the business with the customer. Differentiation today is customer service,” he adds.

Jonathan Camhi has been an associate editor with Bank Systems & Technology since 2012. He previously worked as a freelance journalist in New York City covering politics, health and immigration, and has a master's degree from the City University of New York's Graduate School ... View Full Bio