What other problems result from using TC40 data for chargeback prevention?
Merchants usually don’t receive information until it is too late because of the way TC40 data is gathered and distributed, leaving a small amount time for response. This scenario creates a “race to the refund,” where merchants refund the customer in attempt to avoid the chargeback. Too often the chargeback happens anyway and a double refund, plus chargeback must be absorbed by the retailer. Since TC40 only includes instances of true fraud, disputes originating from customer dissatisfaction, shipping mistakes or a lack of shipment are not included in these reports. “Friendly fraud” is an $4.8 billion problem and growing is also not included in this data resulting in decision-making tools that are incomplete for retailers looking for a complete chargeback picture. Often issuers write-off smaller transactions that would cost them more to process as a chargeback. TC40s include this data resulting in false positive fraud alerts for merchants who would not incur a chargeback from this specific type of transaction. Also, aging of this data often results in disputes being outside of the allowable period for a chargeback to occur, resulting in additional false positives.