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- [00:01]
Bank of America Representative
The thing about AI for business? It may not automatically fit the way your business works. At IBM, we've seen this firsthand. But by embedding AI across hr, IT and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business.
- [00:29]
Optum Representative
IBM Healthcare doesn't always work great. If you've ever waited on a refill or couldn't schedule an appointment, you get it. That's the kind of stuff Optum is changing. They're using data and technology to integrate patient care, pharmacy and everything else. So healthcare is connected, not complicated. What's that look like? Cheaper prescriptions that are easier to get and care that looks at the whole person how you need it. Optum is helping make healthcare work as one for everyone. Learn more@business.optum.com Support for this show comes
- [01:01]
Public.com Representative
from public.com if you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge on public. You can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English, like if the Vix hits 25, buy a put option on the S&P 500 or if my cash balance goes above $20,000, move the excess into my direct index. You approve of the workflow and your agent handles the risk, monitoring the market, watching for your conditions and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full, read and write access to your account via the public API. Go to public.com market and fund your account in five minutes or less. That's public.com market paid for by Public Investing Brokerage Services by Open to the Public Investing Inc. Member FINRA and SIPC Advisory Services by Public Advisors, LLC SEC registered advisor complete disclosures available at public.com disclosures
- [02:12]
David Gura
Bloomberg Audio
- [02:13]
Sarah Holder
Studios Podcasts Radio News Amanda Mull has been covering retail for years. She's tracked the demise of American malls, the explosion of fast fashion brands, and recently a growing sense of distrust between customers and merchants.
- [02:32]
David Gura
People feel like they're being scammed left
- [02:34]
Sarah Holder
and right, sneaky subscription services that are hard to get out of, restrictive return policies, products that just don't meet expectations.
- [02:43]
David Gura
It's a consumer environment where you feel like you have less and less purchasing power, less and less ability to talk to another human about a problem you're having. So people look for ways to get back at retailers.
- [02:57]
Sarah Holder
One of those ways is something called a chargeback, essentially disputing a credit card transaction.
- [03:03]
David Gura
It is when you go to your credit card issuer and go, hey, there's a problem with this transaction, or I didn't buy that, or I don't recognize this, I want you to reverse the charge. I'm not paying for this.
- [03:14]
Sarah Holder
Pushing back on a credit card charge isn't new, but Amanda found that it is happening more and more and more.
- [03:22]
David Gura
From 2021 to 2025, the rate of chargebacks in the US rose about 29%, and worldwide, it rose about 46%. Some of that is due to a greater number of credit card transactions overall, but most of that is because people are disputing more transactions for a variety of reasons.
- [03:44]
Sarah Holder
Reasons that range from the legitimate.
- [03:46]
David Gura
Hey, I ordered this thing online. It never showed up. Yeah, they are not giving me a refund, but I didn't receive the product.
- [03:52]
Sarah Holder
To the deceptive, yeah, I bought this,
- [03:55]
David Gura
but I don't want to pay for it. So I'm going to tell the bank that it was fraudulent, that it never arrived, that there was an issue with it. So I will just get this for free.
- [04:04]
Sarah Holder
I'm Sarah Holder, and this is the big take from Bloomberg News. Today on the show, how the rise of chargebacks is putting merchants on the defense and pulling banks into the fray. And what this growing trend says about shopper psychology and the health of the economy overall. For consumers, filing a chargeback can feel like a quick and easy path to getting a refund. But behind the scenes, it actually triggers what can be a long and complicated process.
- [04:34]
David Gura
The bank goes to the merchant and goes. You have a transaction dispute, it charges them a fee, which can be, you know, 10, 15, $20 depending on the situation. Situation, depending on the. The vendors involved. And the bank investigates. The bank goes, okay, merchant, do you have a tracking number? Do you have shipper information? Can we contact the shipper? And then a lot of times for a very inexpensive transaction on the other end of the spectrum, the bank may look and go, okay, you can have your $20 back. This. It's going to cost us $20 of labor to even start to look into this. So, like, we're not worried about it.
- [05:07]
Sarah Holder
Okay, so the rate of these chargebacks is increasing. And you looked at some of the reasons why. The biggest example being chargebacks that begin with a simple misunderstanding. What you call friendly fraud.
- [05:19]
David Gura
Yeah. So you've bought something as a consumer in what the Banking industry calls card not present transactions. So that's like all of online shopping plus things that like feel not so much like online shopping, but actually are, which is like ordering an Uber ordering doordash like any anything you use an app for that, like even if it summons something in real life that is a card not present transaction. If you let your teenager put your card in Apple Pay and they start using it for stuff, because card not present transactions tend to bounce through a lot of like payments vendors in third parties. What they show up as on your credit card statement is sort of anybody's guess. So you might look at all of those things and go, I don't recognize any of these names who spent $50 on the app store. Like, not me. Like why would I do that?
- [06:06]
Sarah Holder
And you're like, where did that charge come from? I need to dispute that charge.
- [06:09]
David Gura
And then there's also the issue of subscriptions. A lot of retailers will include seven days free or one month free and then a recurring $12 every month that you may agree to. And like it's a legitimate transaction in a legal sense. But like you missed that it was put in a place where like it was designed for you to miss it.
- [06:28]
Sarah Holder
Or you sign up for a free trial, you forget to cancel. But you meant to cancel, right?
- [06:32]
David Gura
You meant to cancel. And it, you look at your credit card statement and it feels like someone has stolen money from you. Yeah, so. So all of these transactions are disproportionately likely to be subject to chargebacks, when in reality none of those are fraud.
- [06:47]
Sarah Holder
Chargebacks have become really easy to file. Many banking apps have a button that lets you dispute a transaction. Consumers can often feel it's worth a try given that low barrier to entry and the high likelihood of getting a refund on a low dollar transaction, especially
- [07:03]
David Gura
if you have a premium credit card that's sort of like baked into the service where it's like, okay, if it's like, if you're disput $7 on the app store that you don't think you bought, like, that's probably just getting refunded. The credit card wants to keep you happy. And also like, it is a very labor and time intensive process to investigate credit card transaction disputes. So if below a certain dollar amount, and that can vary across card issuers, they just decide that like, hey, we're just going to honor these.
- [07:31]
Sarah Holder
So you also talked about this other category of chargebacks where people are basically intentionally using them to get free stuff.
- [07:39]
Bank of America Representative
Yes.
- [07:39]
Sarah Holder
Talk about this not so friendly fraud. How prevalent is this. And how does it work?
- [07:44]
David Gura
Well, it's growing in prevalence. I would say what you see with this type of intentional sort of malfeasance is generally younger consumers. You know, TikTok is a place where young people go to sometimes invent classic types of fraud from first principles. And this is another one. You know, TikTok tries to take these down as they come up, but there's a lot of people on various social platforms telling you that like, oh, if you're like upset with how long shipping is taking, do a chargeback. If you're upset with how long it's taking them to like approve your return, do a chargeback.
- [08:19]
Sarah Holder
Well, the weird trick to get your
- [08:21]
David Gura
money back is fraud.
- [08:22]
Sarah Holder
Fraud.
- [08:23]
David Gura
Yeah.
- [08:24]
Sarah Holder
But what you're describing is that, you know, in part this could be a nefarious impulse to get one over on a retailer. And in part it's responding to this feeling that consumers have that, you know, inflation is rising, companies are shrinking the size of their products and charging the same price. There is this feeling among consumers, I think, that they're getting scammed.
- [08:48]
David Gura
Whether or not those scams are legally actionable, having subscription fees baked into everything in a way that like is constantly surprising and that is hard to opt out of is like a bad consumer experience. It feels like being stolen from. Even if you as a company, you as a merchant followed the letter of the law, like getting rid of your customer service agents in order to divert everybody to an AI bot that like can't answer specific questions about non standard policy issues, like that feels like you are being as a consumer sort of shunted into a system designed to keep your money even when something has gone wrong and you deserve some sort of redress or just want to talk to a person, like when you are spending your paycheck like you were supposed to have some sort of power in those transactions, like that the American system is designed to tell you that that is where you assert yourself. And if it gets harder and harder to do that and things get more and more misleading and you feel like you don't have options for redress, you can see how people justify just reversing transactions.
- [09:51]
Sarah Holder
Yeah, using the chargeback as a way to claw back that power.
- [09:55]
David Gura
And you might get a couple things that way. Like you, you might get a couple free T shirts, free app store stuff, but like overall banks also, you know, card issuers look at who is filing a lot of chargebacks and they will close your account if you are doing it in a really egregious way. I don't think it's beyond the horizon of possibility that they will, you know, report you to law enforcement if they think you're doing it in a felonious way.
- [10:21]
Sarah Holder
And to be clear, because this is illegal, it is illegal to erroneously file a charge back when you have not been defrauded.
- [10:29]
David Gura
Yes. It is illegal to claim that you were a victim of that crime in order to gain a financial advantage over a merchant.
- [10:38]
Sarah Holder
Yeah, hear that? Hear that, kids?
- [10:39]
David Gura
Yeah, it's illegal. You know, there's a variety of consequences that can happen because of this. Like, you can have your credit card closed, which will ding your credit report. Like, will be in bad standing with that financial institution. And then also depending on, like, where you're doing the chargebacks, like, they might decide that they don't want you as a customer anymore. You know, people get very mad at airlines. And whether or not a service was rendered as promised is sort of in the eye of the beholder when it comes to the travel industry, the hospitality industry. But if you file a chargeback against Delta or against United, they might decide not to do business with you in the future. The same is true of hotels. Like, if you are filing, like, a lot of chargebacks against these large businesses that have reason to suspect that you are filing them in a punitive way instead of because of a real issue, like, they can choose to close your account, they can choose to ban you from their service. Like you can get banned from Amazon. People who do this a lot often have their purchasing options curtailed in certain
- [11:43]
Sarah Holder
ways after the break. The consequences of the chargeback craze for retailers, banks and society.
- [11:55]
Public.com Representative
Support for this show comes from public.com if you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge on public. You can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English, like, if the Vix hits 25, buy a put option on the S&P 500. Or if my cash balance goes above $20,000, move the excess into my direct index. You approve of the workflow and your agent handles the risk. Monitoring the market, watching for your conditions and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com market and fund your account in five minutes or less. That's public.com market paid for by Public Investing Brokerage Services by open to the Public Investing Inc. Member FINRA and SIPC Advisory Services by Public Advisors, LLC. SEC registered advisor complete disclosures available@public.com disclosures a burst pipe?
- [13:07]
Sarah Holder
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- [13:36]
Martha (Kohler Cast Iron Ambassador)
global design leader in luxurious kitchen and bath products, came to me and said, martha, we need an ambassador for our timeless, elegant, durable cast iron products, I said, I'm in now. Let me see the factory. Weeks later I was suited up in coveralls and work boots walking through their Kohler Wisconsin cast iron foundry. I stood next to the molten iron furnace, saw the hand applying enamel and touched the gorgeous finished products waiting to be sent out into the world. Since 1883, Kohler cast iron products have been forged and finished by the incredible craftspeople right in Kohler, Wisconsin. I'll tell you, I gained a newfound respect and appreciation for Kohler's cast iron craftsmanship. So now I am lending my discerning stamp of approval to my most beloved Kohler cast iron products for their durability, beauty and timelessness. Shop my Kohler Cast Iron favorites curated on Kohler.com bring the warmth, character and enduring style of these timeless products into your kitchens and bathrooms. As the Kohler Cast Iron Ambassador, I say long live cast iron.
- [15:00]
Sarah Holder
So we've talked a lot about consumer psychology here, but I want to also talk about what this all means for merchants. What has the rise of chargebacks meant for these companies, either the big retailers like Amazon or the small businesses that are experiencing this?
- [15:15]
David Gura
For big retailers, big companies, big merchants, to a certain extent, they're just going to roll it into the overall price levels that they charge. Like it is the cost of doing business. A lot of them have engaged third party vendors, specialists who have particular AI capabilities to separate the wheat from the chaff in these complaints and figure out which ones they actually need to deal with versus which ones they can sort of ignore or just ban that customer or something like that.
- [15:43]
Sarah Holder
So third party companies that work with them to identify chargeback fraud, identify chargeback
- [15:49]
David Gura
fraud, and to sort of do the work of like gathering evidence and presenting a case to the bank and like trying to sometimes reach out to the customer and figure out if there's a way to come to a understanding before, you know, things go further. Because if retailers incur too many chargebacks, like that is a problem for them. Payment processors don't want to work with companies that incur a lot of chargebacks. That makes you a high risk merchant. And it means that you were going to have to pay higher transaction fees to credit cards and it means that you are going to have to keep larger cash balances in escrow to deal with disputes that come up.
- [16:25]
Sarah Holder
These merchants are hiring these third party actors. How much is that costing them?
- [16:30]
David Gura
It costs a lot of money. For a lot of vendors there's going to be a per investigation fee and then there's like the sort of general retainer and like the onboarding a vendor into your very large business is always quite expensive. I don't have like a specific number because it really depends on the size of the business, the suite of services, but it is, it is an enormously expensive thing because chargebacks are enormously expensive. If you lose a chargeback that you shouldn't have lost as a merchant, you're out the penalty, you're out the revenue, and you're out the product or the time.
- [17:03]
Sarah Holder
So it's expensive to fight chargebacks, but not as expensive as it is to lose a chargeback claim?
- [17:09]
David Gura
Yes. For small merchants, the impact is more direct. If someone files a chargeback against you as a merchant, you were getting charged the chargeback penalty by the bank. Even if you win the dispute, that's $15, let's say, out the door immediately.
- [17:26]
Sarah Holder
And what about banks? What does it mean for banks to be sort of in the middle of this negotiation, this tug of war? How are they responding to the rise of the chargeback?
- [17:35]
David Gura
Sort of like merchants, they are employing a lot of like new types of technology to sort of like figure out which are the disputes that they need to focus on that deserve manpower, that deserve an actual investigator. Which ones are the ones that they can like deny pretty quickly and which ones are the ones that they should go ahead and probably approve pretty quickly. There's various types of, various types of vendors that do that as well for banks. And then really your recourse as a bank, if you're not going to refer someone to law enforcement, if it's not a situation where there's like a massive scale of these fraudulent chargebacks, then if someone is abusing the system and creating a lot of work for you as a bank, In a way that looks like probably, like, potentially criminal activity, Then you can just close their account. And then, like, the payment processors also are trying to identify bad actors on the merchant side. A company that is constantly being disputed is probably doing something that, like, makes you not want to associate with them as a processor.
- [18:33]
Sarah Holder
Help me understand how big of a deal this phenomenon is. Like, is this something that's a warning sign about our economy writ large, that all this money is flowing into this chargeback economy, that trust between consumers and merchants is breaking down like this?
- [18:48]
David Gura
I think it is a big deal. Like, I think that the financial implications for it, especially for small businesses, like, are a really big deal. We're talking about, like, hundreds of millions of transaction disputes. It is a really large number annually. And that's a lot of money that is sort of being sucked into this, like, weird gray area of, like, maybe it is involved in fraud, maybe it is not. But it's an indicator that, like, our interactions with the economy have gotten more confusing and more stressful. And more broadly, I think it is just like, another indicator of trust that undergirds a lot of elements of, like, living in a functional society is breaking down. Like, we have sort of, I think, lost a sense of, like, who it is we're dealing with and that, you know, whether or not there actually is a human on the other end of that transaction. And it makes us a little bit less trustworthy to each other. And I think it motivates people to act in untrustworthy ways.
- [19:47]
Sarah Holder
This is the big take from Bloomberg News. I'm Sarah Holder. The show is hosted by me, David Gura and Juan Ha. The show is made by Sean Carter, Aaron Edwards, David Fox, Jeff Grocott, Paddy Hirsch, Rachel Lewis, Christie, Emma Munger, Laura Newcomb, Naomi Ng, Julia Press, Tracee Samuelson, Naomi Shaven, Victor Sweezy, Alex Sugiera, Julia Weaver, Yang Yang, and Taka Yasuzawa. Our executive producer is Nicole Beemsterboer. To get more from the Big Take and unlimited access to all of bloomberg.com, subscribe today@bloomberg.com podcastoffer if you like this episode, make sure to subscribe and review the Big Take. Wherever you listen to podcasts, it helps people find the show. Thanks for listening. We'll be back on Monday.
- [20:46]
Optum Representative
Healthcare doesn't always work great. If you've ever waited on a refill or couldn't schedule an appointment, you get it. That's the kind of stuff Optum is changing. They're using data and technology to integrate patient care, pharmacy and everything. Else. So healthcare is connected, not complicated. What's that look like? Cheaper prescriptions that are easier to get and care that looks at the whole person how you need it. Optum is helping make healthcare work as one for everyone. Learn more at business.optum.com Wait, I came
- [21:17]
Bank of America Representative
in for two things.
- [21:18]
David Gura
How is this $47?
- [21:21]
Public.com Representative
Alright, we're gonna need a plan here.
- [21:23]
Bank of America Representative
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- [21:35]
David Gura
Oh that's actually really simple.
- [21:38]
Bank of America Representative
Safe balance banking. One less thing to figure out. Learn more at b of a.com earn 100 terms and conditions apply. Bank of America and a member fdic.
- [21:47]
David Gura
Big transfer news today. Who's moving me to the couch with Domino's? Best deal ever since they just added stuffed crust.
- [21:54]
Sarah Holder
Any pizza?
- [21:54]
Bank of America Representative
Any toppings?
- [21:55]
Public.com Representative
Now with stuffed crust for 9.99.
- [21:57]
David Gura
It's a long term contract with no release clause.
- [22:00]
Bank of America Representative
Only 9.99?
- [22:02]
Public.com Representative
Yeah, that sounds like the move. I'm heading straight to DOM.
- [22:07]
David Gura
Prices higher for some locations. Excludes Excel and specialty pizzas. Select this offer from 6:15 through 7:26 online only. Size availability varies by crust type. Max 7 topping 6 for pan and New York style crust. Minimum purchase required for delivery prices, participation, delivery area and charges may vary.