Fraugster and Wordline are aiming to ‘weather the storm’ of the COVID-19 pandemic by collaborating on a new chargeback protection solution.
The companies seek to eliminate chargeback losses for merchants by utilising Fraugster’s AI trained software to deliver more accurate decisions to boost approval rates and take full liability for fraudulent transactions.
As the pandemic caused mass cancelled flights and refunds to consumers, it also opened up lanes for fraudsters to take advantage of tireless travel operators by attacking weak points in their systems.
As a result, Fraugster identified a surge in ‘angry chargebacks’ due to frustrated customers claiming to have not authorised a transaction through a booking cancellation or change.
The payment intelligence companies research also found striking differences between pre and post-pandemic customer attitudes, as chargeback rates spiked from 0.5% to over 3% after COVID-19.
“Fraugster’s approach to addressing chargebacks is to use a combination of machine learning and behavioural science to build a sharper picture of the transaction in question,” said Christian Mangold, CEO of Fraugster.
“This means merchants can provide a more seamless buying experience for legitimate customers while also preventing fraudulent transactions from getting through – this includes transactions that may turn into chargeback fraud later on.
“We are pleased that global brands have increased their revenue of between 5-16% since adopting Fraugster’s Chargeback Protection solution product and report a steadier and more predictable financial coverage for chargebacks and bottom line impacts.”
Additional factors, such as chargeback total costs, have risen three times more than its original transaction value. This has impacted the travel industry hard, as Fraugster indicates that order values within the sector are in excess of $750.
Mangold highlighted to PaymentExpert last week that in total, €80bn was lost to online fraud, when discussing some of the findings of its recently released Payment Intelligence Report 2022.
To add on, 80% of online merchants are believed to have reported an increase in first party fraud. Fraugster and Wordline aim to significantly reduce the costs related to managing chargebacks, along with its associated losses and fees.
Hotel group chain, Iberostar, implemented the chargeback protection solution from both companies and its Corporate Treasury Director, Ferran Llompart, saw some “fantastic achievements”.
“Iberostar experienced a massive increase in fraud pressure during the pandemic. We were pleased that partners Fraugster and Worldline were able to act so quickly to design a new AI model specifically for us. In a few short months we reduced the Chargeback rate from 2.76% to 0.07%, which was a fantastic achievement,” stated Llompart.