Our reporter interviewed the chief executive officer of Chargebacks911 in Amsterdam at Money20/20

Monica Eaton on the future of financial crime

Money20/20 took place in Amsterdam recently, and our team was on the ground for all three days of the flagship conference. 

Our reporter Robert Welbourn interviewed a series of high-profile industry names. First up was Monica Eaton, chief executive officer of Chargebacks911, an organisation working with both merchants and financial institutions (FIs) to reduce the volume of fraudulent and mistaken card chargebacks. 

Chargebacks911 was founded by a team of former merchants, is that correct? 

Yes! When I was at Berkman, I had the goal of becoming the next eBay. I had a marketplace in which I was selling, and I found I was receiving a lot of chargeback requests. When I investigated why, I discovered I could prevent 50% of the issues myself. Of the rest, maybe 33% were all down to the rules, the modeling, and understanding the behaviors of banks and consumers. 

Chargebacks911 was born out of necessity after I discovered that I wasn’t the only merchant in the world struggling with this problem. 

I read on your site that one of the issues you encountered was that financial institutions have quite narrow parameters to define why chargebacks might be happening? 

I started out in the merchant sector, nearly 15 years ago, and then expanded to serve financial institutions. When you’re in a scenario where you can see all three sides of a transaction, then you can really appreciate and understand it.  

When it comes to chargebacks, everybody shares the same entity, and we’re all fighting for the same cause. The problem is, oftentimes you’re addressing the system, but really, it’s a data problem. 

If you want to solve any chargeback problem, and get to the heart of the matter, you need to make sure you have all the data; but you also need be able to interpret it. When it comes to banks, they don’t have all the richness of the merchant data set in this post-transaction environment. This is because it’s a type of fraud that happens after the transaction, unlike typical fraud, which is in the pre-transaction environment.  

Is data what really makes the difference? 

The most important thing is to make sure that we protect our consumers. If they don’t feel secure, they’re not going to transact, and then nobody makes any money. 

However, as fraud continues to evolve, how does a consumer know what data to provide? Even if their identity has been stolen, or if their account was taken over, the FI just has to take their word for it. The problem is you need all sides of that transaction. You need the data from the merchant to support the consumer’s claim. 

That is exactly what we do. We’re masters at taking these very complex data sets and bringing them to life in a simple, standardised structure. We also apply automation to the process; of course, in the chargeback process there’s always going to need to be some element of human input, but we’ve automated a significant amount of the process to resolve disputes efficiently. 

How do you think this will be impacted by the rise of new technologies? 

I love all new technology. That’s the cornerstone of our organisation: how can we innovate? However, these days innovation is not just automating 10 steps; actually, we need a white canvas approach. How can we make things better? 

Chargeback fraud is in decline. But unfortunately, just like any other type of fraud, when you plug one gap, then the fraud migrates to another cycle. And then the consumers change their behaviour too. 

There’s technology to literally duplicate a person’s voice and speech patterns; I’ve also seen technology where you can upload a few pictures and then create video images, 3D images, speaking just like that person. It’s definitely a scary territory when it comes to scams. 

Do you think there’s a need for greater education for consumers around fighting fraud? 

A controversial subject is romance: how much can you educate people to avoid potential romance scams? If you’re completely in love with someone to the point where you transfer £100,000 to them, how can you educate someone out of that? 

It’s a sticky situation; we do have to educate, but we also have to create a metric for better accountability, through transparency and data on all sides of the equation. It’s about creating that balance. I hate the ‘f’ word, friction, but we need some friction in the processes so that we can have a balanced exchange of views. 

The problem you have, however, is if you educate consumers too well you’ll put yourselves out of business! 

That’s a bit like asking anti-fraud experts: if you’re effective at solving fraud, aren’t you concerned that there’s never going to be fraud? 

Human ingenuity is such that fraud just continues to advance. There are so many different possible things to exploit. Unfortunately, there’s more channels and methods to exploit someone than even just five years ago. 

On top of this, there have been more than 200 different rule changes affecting chargebacks and disputes alone in the last 12 months. And this trend in regulation is rising by 32% year over year. 

But on the plus side, there are three chargeback networks and these have grown by 71%. That’s a 71% increase in opportunities to exchange data and prevent these disputes from happening, yet still, as an industry, we’re growing at a rate of nearly double the transaction rate of e-commerce. It’s a mammoth problem to solve; I think it’s exciting. 

That’s a huge number of rule changes in such a short amount of time! 

In order to really advocate change, you have to collaborate and everybody needs to have the same mindset. They have to share the same level of urgency. On the back of COVID we had that urgency, but there was also way too much chaos. Everyone was in survival mode. 

When you look at so many structural changes, so many different shifts, a lot of it is due to investment in technology. I think it’s the intersection of science and the merchant. 

We all know and recognise that change is inevitable. If I look at it-and I probably have a little bit of a controversial view about it-I think a lot of us are focused on how can we reduce charge rates. But we’re not going to reduce them. Actually, we need to follow the behavioral sciences of our consumers and prevent fraud this way. 

So it seems like it’ll always be a mix of education, tech, and fighting an ever-evolving problem? 

We’re in an age of entitlement and we’ll choose convenience over security and over friction. At Chargebacks911 we’ve proven that consumers want a concierge service from their issuing network. 

We want that one-stop shop where we can call our issuers and say, “no, I didn’t want this, I have a problem with this. Can you handle this? Can you do this?” That’s what we want, that makes us feel safe.  

We want to stop the major consumers from relying on their banks to do everything for them. That’s actually what we want; that’s a great exchange mechanism that’s already growing. We just need to re-evaluate how these different types of paperwork are coded and the downstream is created.

Image: FinTech Intel

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Robert Welbourn
Robert Welbourn is an experienced financial writer. He has worked for a number of high street banks and trading platforms. He's also a published author and freelance writer and editor.