The high stakes of customer disputes: how to protect trust and stay compliant

Customers don’t expect perfection, but they do expect fairness, speed, and transparency when something goes wrong. A dispute process that feels unclear or slow leaves them frustrated and disillusioned. A process that feels digital-first, simple, and fast — with clear updates along the way — leaves them reassured and far more likely to stay.

In fact, disputes are often the only time a customer actively engages with their bank during a moment of stress. Each case resolved is an opportunity to build or lose trust. Done poorly, it accelerates churn. Done well, it turns a negative event into proof that the bank can be relied on when it matters most.

The operational and compliance pressures

Behind the customer experience lies an expensive and complex machine. 

Adding to the challenge are strict compliance rules. Under Regulation E, banks must investigate most debit disputes within 10 business days, issue provisional credit if unresolved, and close cases within 45–90 days depending on the transaction type. Missing these deadlines creates both regulatory exposure and reputational damage.

The result is a process under constant pressure: costly to operate, tightly bound by regulation, and vulnerable to rising dispute volumes if left unchanged.

That’s why the industry is turning to innovation. Rigid and manual operations are being reshaped by new rules and technologies that aim to reduce friction, resolve cases faster, and cut down on unnecessary chargebacks.

Beyond the networks themselves, merchant alert networks like Ethoca and Verifi are becoming essential tools. These connect issuers directly with merchants, allowing disputes to be resolved before they ever reach the formal chargeback process — often in under 72 hours. 

At the same time, the data available to issuers is expanding. Metadata enrichment — from device IDs and geolocation to recurring payment history — gives banks the ability to spot invalid or duplicate disputes instantly. Instead of relying only on customer claims, they can see context that points to fraud or confirms legitimacy.

The common thread across these developments is early, data-driven resolution. Banks that successfully integrate these tools into their dispute workflows can reduce fraud losses and deliver clearer outcomes for customers.

A resilient dispute process depends on a set of core capabilities that work together. From how disputes are initiated to how they’re tracked and resolved, each element plays a role in ensuring compliance, efficiency, and customer trust. The following building blocks define what a future-ready dispute process looks like in practice:

1. Self-service initiation with guardrails

Disputes should begin where customers already are: in their banking app or online portal. But self-service must come with controls to prevent unnecessary claims. Smart prompts such as “Did you recognise this merchant?” or “Have you already cancelled the subscription?” deflect friendly fraud before it reaches the back office, cutting costs and keeping the process efficient.

2. Automated evidence gathering

Investigations often stall because evidence takes too long to collect. APIs now allow issuers to pull receipts, shipping data, and transaction histories directly from merchants, acquirers, and networks. This automation means investigators begin with a clear set of facts instead of spending days chasing paper trails, accelerating time to resolution.

3. Real-time status updates

Customers don’t want disputes to disappear into a black box. Just as they expect to track a delivery, they want to know where their case stands, what happens next, and when they’ll hear back. Providing transparent, real-time updates reduces anxious calls to the contact centre and reassures customers that progress is being made.

4. Integrated back-office workflows

Even the best front-end experience fails if the back office can’t keep up. Dispute intake should connect directly to case management systems, with automated triggers to meet Reg E and card-network timelines. By reducing manual bottlenecks, banks lower costs, ensure compliance, and resolve cases more consistently.

Banks don’t need to overhaul everything at once. The smartest approach is staged, building capability step by step while focusing on the highest-value use cases first.

That journey typically starts with an audit of dispute flows — mapping customer touchpoints and back-office bottlenecks. 

From there, banks can embed self-service initiation in digital channels and expand into evidence integration with networks and merchants.Compliance deadlines must be built into automated workflows, ensuring deadlines are never missed. 

Tackling high-volume areas like card-not-present fraud first allows banks to prove value quickly, then expand with confidence. Step by step, the pieces add up to a comprehensive dispute solution.

For many banks, the challenge remains delivering dispute management in a way that truly works for both customers and staff. 

Too often, disputes are buried in clunky portals or handled manually in the back office, leaving customers frustrated and operations overloaded. Even when self-service options exist, many flows fall short—failing to collect the information needed for a proper resolution and forcing staff to step in for assisted initiation.

Backbase reimagines dispute management as part of the everyday digital banking experience. Our solution embeds self-initiation and tracking directly in mobile and online channels, integrates with merchant and network data, and connects seamlessly to back-office workflows. 

From a back-office perspective, new business rules configuration capabilities accelerate — and ultimately automate — case handling. By further adopting AI agents, even more sophisticated rules, such as merchant size or stock market value, can be applied to suggest optimal case resolutions. Customers gain clarity and control, while banks achieve greater efficiency, compliance, and cost reduction.

The result is a dispute management process that builds loyalty instead of eroding it, turning what was once a compliance burden into a true competitive advantage.