He said that he never went to the wine tasting. The merchant had a photo of him holding a glass.
That’s a real dispute, and it got a good laugh on our webinar yesterday. Most disputes aren’t that entertaining. They’re $49.99 charges your team works by hand, or quietly writes off, because the dispute write-off threshold keeps climbing at community banks and credit unions. There’s a better option than raising it again: resolve more card disputes with the merchant before a chargeback ever reaches the card network.
The full session, Before the Chargeback: A Guide to Chargeback Intercept™, is now on demand. It runs under 30 minutes. Watch the recording here.
Why are card disputes growing at banks and credit unions?
Volume is outrunning the process.
Consumers made about 120 billion debit card transactions in 2024, according to the Federal Reserve, and roughly half are now card-not-present. Online purchases generate more of the disputes that land on a back-office desk (i.e., the merchant name the cardholder doesn’t recognize, the order that never arrived, the refund that never posted).
Many community banks and credit unions still track those cases in spreadsheets and email. That works at 10 disputes a month but breaks when volumes grow, as they have consistently.
Why are Reg E deadlines harder to meet as dispute volume grows?
The clock starts the moment a customer or member reports the error, and it doesn’t care how busy your team is.
Reg E generally gives your institution 10 business days to investigate or issue provisional credit (20 for new accounts) and 45 days to finish the investigation (90 for point-of-sale, foreign-initiated, and new-account transactions). Examiners from the FDIC, OCC, and NCUA check whether you hit those dates. When two or three people work every case by hand, a volume spike shows up first as cases aging toward a deadline.
How much are banks and credit unions writing off on card disputes?
More every year, and much of it by policy.
A single dispute can take 30 to 60 minutes of staff time across intake, investigation, documentation, and the final letter. Mastercard research puts it at about two and a half customer calls to resolve one. Add representment and arbitration fees on the cases that escalate, and provisional credit your team can’t recover.
Then there’s the write-off threshold. For years, $25 to $35 was typical. At a conference this week, $50 wasn’t unusual. One prospect told us they now write off everything under $100.
Is raising the dispute write-off threshold the right answer?
No. Raising the threshold doesn’t lower your dispute costs. It moves them to your bottom line.
Every item under the threshold is a dispute where your institution pays the cardholder back and nobody asks the merchant. And many merchants would have refunded the charge if someone had asked.
Can banks and credit unions resolve a dispute before it becomes a chargeback?
Yes, for disputes with merchants that participate in the network.
The dispute still opens, and your Reg E obligations still apply. What changes is the first step of the investigation. The merchant receives the dispute details directly and has 72 hours to refund the cardholder. If the merchant refunds, the case closes with a letter and no chargeback, no network filing, and no full investigation. If the merchant declines, your normal process picks up where it would have anyway.
Merchants say yes for their own reasons. Every chargeback counts against their chargeback ratio, and a high ratio brings extra fees, network monitoring, and eventually the loss of their ability to accept cards. A refund made before a chargeback keeps their ratio clean.
We model resolution on about 35% of eligible card disputes. That’s why we tell institutions to send everything through, including the items under their write-off threshold. Some institutions we talk with now plan to lower their threshold instead of raising it.
Watch the Chargeback Intercept webinar recording
In under 30 minutes, the recording covers:
- What a card dispute costs your institution in hard dollars and staff time
- How Chargeback Intercept works and why merchants choose to refund
- A savings model at three dispute volumes, from 25 to 500 disputes a month
- A look at a resolved case and the Reg E reporting dashboard in FusionDMS
FusionDMS is FIntegrate’s dispute management software for check, ACH, and debit card disputes, with Reg E deadline tracking, automated letters, and a complete audit trail. Chargeback Intercept is the first step of the FusionDMS investigation workflow: your investigator sends the dispute to the merchant with one click, or FusionDMS workflow automation sends it for them. If you already have a dispute system, Chargeback Intercept can run ahead of it.
Watch Before the Chargeback: A Guide to Chargeback Intercept on demand. Then send us your monthly dispute volume and we’ll run your numbers with you.
