Over half of consumers find billing statement descriptions confusing—and it’s costing UK merchants millions in chargebacks

Research from Chargebacks911, the global chargeback technology leader, shows that unrecognised transactions are the leading reason customers dispute a transaction, causing a significant headache for merchants, draining resources and impacting their bottom line. According to data from Visa and survey data from Chargebacks911, chargebacks stemming from confusing billing descriptors are costing U.K. merchants more than £128 million each year. 

Chargebacks911’s 2024 Cardholder Dispute Index—a comprehensive survey of more than 4,000 consumers gauging their views on transaction disputes— reports a majority (58%) of cardholders admit to sometimes finding card statement purchase descriptions confusing. Of that number, nearly a third reported this happens “somewhat often” or “very often,” and is the reason customers dispute a charge 27% of the time. 

Confusion around billing descriptions makes it that much harder for customers to recognise valid descriptions. Mistaking them for fraud can lead to unwarranted disputes and chargebacks for merchants, costing them money, resources, and reputational damage if not addressed.

As shopping habits have shifted increasingly online and away from familiar high-street brands, the potential for transaction confusion has grown exponentially. While digital commerce gives consumers more retailers and products to choose from, a lack of familiarity with some brands and parent companies doing business as a myriad of other names creates complex transaction records that many consumers find difficult to track. 

“I don’t think there has been a more seismic shift in the way we shop than there has been over the last decade,”  said Monica Eaton, Founder and CEO of Chargebacks911. “If merchants are not strategizing with the card networks and their merchant account rep to produce clear billing descriptors, then they risk financial and reputational damage as consumers more often than not will contact their banks to dispute the charges.”

The nature of these disputes often falls under what is known as “friendly fraud.” This term refers to instances where consumers dispute legitimate charges, sometimes intentionally. According to Javelin Strategy & Research, friendly fraud accounts for 60% to 80% of all chargebacks. The impact on businesses is profound in terms of financial loss and the administrative burden of managing these disputes and optimising policies and procedures so it doesn’t happen again.

“One driving factor behind the rise in transaction confusion is the diversification of shopping platforms and methods. Consumers now have access to a plethora of online stores, subscription services, and digital wallets, each presenting transactions differently on statements. While beneficial for consumer choice and convenience, this variety creates a fertile ground for misunderstandings,” said Eaton. “A purchase made on a third-party marketplace, for example, might appear under a different name on a bank statement, leading the consumer to question its legitimacy.”

Moreover, the global expansion of eCommerce exacerbates the problem. A study by Flyers-on-line.com projects that global e-commerce revenue will grow by 64.69% from 2023 to 2027, reaching an astonishing $6.34 trillion. As markets like China—which alone is expected to see its eCommerce market value more than double by 2027—continue to dominate, the complexity of cross-border transactions and diverse payment systems will only increase. This is projected to reach approximately $1.73 trillion by 2027 with a compound annual growth rate (CAGR) of 17.3%. For consumers, this means more unfamiliar transaction entries on their financial statements.

When a consumer sees an unrecognised charge on their account, their first instinct is usually to call the number on their card. Although a logical step, it doesn’t mean that the unrecognised transaction automatically indicates fraud. The cardholder is still required to contact the business before calling the bank. This allows the merchant to fix the problem, which often resolves issues without involving the bank at all. However, the findings show that the most common reason for contesting a transaction with the issuer was finding an unrecognised charge on their account. Yet, more than a quarter of merchants don’t know how their billing descriptor appears on statements, and nearly half claim they have never modified their descriptor to more clearly represent their organisation.

According to Eaton, merchants can contact their merchant service provider to review and change their billing descriptor. 

While updating billing descriptions can significantly ease chargebacks from unrecognised transactions, Eaton maintains that merchants still need a proactive and responsive chargeback management strategy for consumers who will still instinctively call their bank for purchases they’ve forgotten about.

“While there are companies that offer ways for merchants to prevent transaction confusion, the problem persists because, unfortunately, people still forget purchases, even when given the information that should help them,” said Eaton. “This is where we come in to help merchants with all aspects of chargebacks management, from prevention through to representment.”

The stakes are high, and businesses that fail to address transaction confusion risk financial loss from chargebacks and potential damage to their reputation and customer relationships. With friendly fraud representing a significant portion of chargebacks, Eaton says the onus is on merchants to implement robust measures to mitigate this risk.

For more information on Chargebacks911, visit www.chargebacks911.com.