The Ethical Dilemmas of Fintech Breed Mistrust; Top 3 challenges

The Ethical Dilemmas of Fintech Breed Mistrust;  Top 3 challenges

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Trust is earned, and fostering public confidence in any business enterprise must be built on a foundation of integrity and a sincere commitment to the best interests of your customers and society at large

Financial technology, often referred to as “fintech”, seeks to improve and automate the delivery and use of financial services through advanced solutions.(1) Sounds simple enough – until you go down the rabbit hole of which products, services and amorphous, shape-shifting technologies are thrown into the fintech mix. There are mobile payments, consumer banking, payment gateways, insurance, blockchain and cryptocurrency, to name a few.(2) Monica Eaton, founder of Chargebacks911, distinguishes between fintech companies that participate as money movers and those that act as a channel or service providers. A boundary must be clearly defined before one becomes indistinguishable from the other; otherwise they are lumped together without an eye to the ethical implications of both.

Google “What is fintech?” unleashes a wide range of examples in addition to those mentioned above – banking, payments, personal financial management, wealth management, lending and embedded financial services, such as store credit cards.(3) Fintech, as described generically so far, and its current infiltration in the traditional banking industry have attempted to address consumer privacy and security concerns due to the inherent vulnerabilities of virtual finance. Data breaches, cybercrime, identity theft and the buying and selling of consumers’ personal information are hallmarks of the 21st century cyber security dangers of online and app-driven financial transactions.

A recent report from the US Treasury Department recognizes the benefits of fintech and calls for additional oversight to reduce the inherent dangers of this new technology to protect consumers and prevent fraud and abuse.(4) Fintech companies involved in the movement of money are regulated such as financial institutions at both the federal and state levels, which sometimes collide when federal regulations trump state ones. Inconsistent regulations and the struggle to keep pace with the rapidly evolving transmutations of the fintech industry make it more difficult to identify and prosecute fraudulent activity.(5)

Interestingly, despite 81% of people having their primary bank account linked to some type of fintech tool, according to a Mastercard study, 86% don’t really trust fintech to protect their financial data.(6) But convenience wins the day.

So, where do fintech service providers fit in? As Eaton points out, fintech specialists have yet to be clearly differentiated in their role in this crowded field of financial institutions. Fintech companies provide services or software-as-a-service (SaaS) to either fintech companies or financial institutions that move all the money around in the virtual ecosystem. There is a lot to keep track of. SaaS providers like Chargebacks911 exist to relieve companies that are vulnerable to the pitfalls of using fintech in their business operations and do not have the resources to manually scrutinize the transactions that happen at lightning speed. e-commerce merchants lose billions of dollars, over $48 billion annually, and count it as the cost of doing business in cyberspace.

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For Eaton, Chargebacks911 is the realization of its commitment to principled business practices that protect the interests of its e-commerce customers and their customers. As a fintech service provider, Chargebacks911’s mission is to provide clients with intelligent and efficient solutions that help stakeholders suffering the consequences of ongoing regulatory changes and complex workflows that plague the chargeback process. Chargebacks911 and sister brand Fi911 provide configurable solutions built for scale and scope.

There are three main challenges facing the fintech industry with chargebacks that threaten the integrity of the system and contribute to risks to the sustainability of consumer protection: 1) The increasing amount of data connections required, 2) The expanded requirements and mandates for related data exchange both between between banks and their customers, and 3) the lack of data agility necessary to cope with the evolving rules, guidelines and privacy laws.

The lack of universal standards and technology-driven consumer expectations continue to expand the opportunity for chargeback fraud, also known as friendly fraud. Unfortunately, without addressing all three challenges for the fintech industry, the foundations become unbalanced and integrity is compromised. Consumers are wary when it comes to internet fraud and scams. Meeting consumers’ wants and needs is crucial to continuing e-commerce and subsequent fintech growth trajectories.

As a consequence of digitization, innocent e-commerce vendors can become targets of misplaced paranoia. Customers can, for example, shop with an online store. When the credit card bill arrives, they may forget the transaction or not recognize the name of the company they purchased goods or services from – a common and increasing occurrence due to the speed of innovation and technological development.

One of the most common pitfalls is the use of the “one-click checkout”. It masterfully delivers needs on demand, but contributes equal but opposite fallout to consumers with little or no regard for any counterbalance to sellers. Virtually all responsibility for the consumer is removed in the process. Couple this with a dispute process for one-click transactions and the fallout spirals out of control, with sellers bearing all the consequences.

In an abundance of caution, consumers contact their financial institution to refuse the sales contract and get their money back, known as a chargeback, with few or no questions asked. A frictionless process is expected here as well, but consumers are not made aware of what actually happens behind the scenes – without realizing that bypassing the retailer altogether results in an increasing financial pain point for each party in the payment chain. Often it is an honest mistake, but one with the unintended consequence of denying a legitimate business its legitimately earned profits. And while the retailer and their bank have the ability to dispute the claim, the cost of this exercise is often prohibitive, prompting banks and retailers to write off the false charge – unintended reward for dangerous behavior.

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In this example, like so many that plague the financial services industry, the lack of data existence, understanding and context serves to drive these negative statistics. As we’ve seen over the past decade, and especially with a catalyst like COVID-19, friendly fraud morphs from innocent to intentional — a faceless, virtual crime that includes no consequence, punishment, or monitoring for malicious customers. Today, this type of online shoplifting is not only allowed; for all intents and purposes it is considered legal – it is championed by banks under considerable pressure from regulators, uninformed about the structural changes affecting the digital age, and operating with legacy mindsets hung on a system built to support trade in the 1970s -the number .

Eaton comments, “There is a huge trust problem on both sides, motivated by dated policies and regulations that have failed to keep pace with changing times.” As we’ve seen with the skyrocketing growth of first-party fraud and abuse – due to the ease of contacting the bank to dispute a purchase and receiving a refund with little or no explanation or pushback – many other areas of the ecosystem are at risk. to be exploited as well. AI tools and smart technologies like ChatGPT could be the next disruptor as technological innovation continues to increase.

The task of retrofitting the new world around older mindsets stuck in the past has failed. Yet it continues to remain unaddressed due to fragmentation that muddies the waters. Addressing these challenges and rehabilitating trust in the system requires stakeholder collaboration, mass digitization and backwards compatible solutions that provide clear and fair governance for all stakeholders in accordance with their role in the trade.

Negative customer experiences result in 91% customer churn.(7) With more and more people venting their frustrations online, it’s more important than ever to offer exceptional and personalized customer experiences. Automated customer service phone lines—press one, press seven, press nine, then back to one—can exacerbate customer dissatisfaction with a company.

Eaton has some tips: Make sure contact information is easily visible and that interaction with automated services is user-friendly; be empathetic to the customer’s complaint; get feedback and learn from it; show appreciation for your customers by providing rewards and other incentives; customize the experience; be transparent; and always follow up.(8)

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A vocal advocate for ethical business practices and accountability, Eaton emphasizes, “Trust is earned, and fostering public trust in any business enterprise must be built on a foundation of integrity and a sincere commitment to the best interests of your customers and society at large.”

About Monica Eaton

As an acclaimed entrepreneur, speaker and author, Monica Eaton is recognized as a thought leader in the FinTech industry and a champion for women in technology. She established her entrepreneurial credentials when she sold her first business at the age of 19. When a subsequent e-commerce venture was plagued by revenue chargebacks and fraud, Eaton rose to the challenge by developing a robust solution that combined human insight and agile technology. Today, her innovations are used by thousands of companies worldwide, cementing her reputation as one of the payments industry’s foremost experts in redress management, chargeback management and fraud prevention. Monica Eaton is honored to be the recipient of various industry awards. Her own expertise, as well as the services provided by her companies, have been recognized as outstanding by her peers and other industry leaders. Visit


1. Kagan, J. (2023, March 9). Financial Technology (Fintech): Its Uses and Impact on Our Lives. Investopedia. Retrieved April 21, 2023, from

2. Howell, J. (2023, March 14). Financial technology (FinTech) – applications and examples. 101 blockchains. Retrieved April 21, 2023, from

3. Trificiana, J. (2022, October 3). What is Fintech? 6 main types of fintech, and how they work. Plaid. Retrieved April 21, 2023, from

4. New finance report shows fintech industry requires extra oversight to close loopholes, prevent abuse and protect consumers. US Department of the Treasury. (2022, November 16). Retrieved April 21, 2023, from

5. Global Legal Group. (nd). Fintech laws and regulations: US: GLI. GLI – Global Legal Insights – International legal business solutions. Retrieved April 21, 2023, from,and%20providers%20of%20financial% 20 services

6. Reich, G. (2022, April 9). Data shows that people do not trust open banking services or FINTECHS, but use both. The financial brand. Retrieved April 21, 2023, from

7. Count the customer – look network. (nd). Retrieved April 21, 2023, from

8. The 12 Customer Service Best Practices to Adopt in 2023. Returns911. (2023, March 9). Retrieved April 21, 2023, from

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