48 min
Fraudology
Cuando la IA cancela tu cuenta: 966 millones de razones para gestionar correctamente las disputas por contracargos
48 min
Bienvenidos de nuevo a Fraudology.
En este episodio estaré yo solo, pero tengo dos historias que analizar a fondo. Son realmente importantes para cualquiera que se ocupe de disputas por contracargos, ya sea del lado del comercio o del banco.
La primera es la de Uber y los casi mil millones de dólares en multas por la desactivación automatizada de cuentas. La segunda es la historia que realmente quiero analizar a fondo: Hims & Hers superó el umbral de contracargos en su negocio de suscripciones para la pérdida de peso.
Es raro que este tipo de situaciones salga a la luz, y creo que los comercios pueden aprender mucho de ellas. Sé que muchas empresas están recurriendo actualmente a la IA para cancelar cuentas de compradores o vendedores. Analizaremos el cálculo de la comisión por contracargo en cada disputa, qué está provocando realmente estas disputas y qué les diría a estas empresas si fueran clientes míos.
Lo que escucharás:
- Por qué la multa de casi mil millones de dólares impuesta a Uber en virtud del RGPD por usar IA para desactivar cuentas automáticamente debería preocupar a cualquier empresa que utilice IA para cancelar cuentas de compradores o vendedores, no solo a las plataformas de transporte compartido.
- Cómo funciona realmente el programa de supervisión de adquirentes de Visa, incluido el umbral de contracargos que los comercios no deben superar y el coste real en dólares cuando lo superan.
- Un análisis completo de la situación de los contracargos de Hims & Hers, incluida la demanda de la FTC, las infracciones de la Ley para Restablecer la Confianza de los Compradores en Línea y las quejas reales de clientes extraídas de registros públicos obtenidos mediante la FOIA.
- Cómo abordaría el análisis de las causas raíz de los contracargos si se tratara de un cliente, desde las prácticas de facturación de suscripciones hasta las deficiencias en la política de reembolsos.
- Ejemplos reales de comercios que utilizan herramientas de IA generativa para responder a contracargos, incluido uno que, gracias a sus estrategias, aumentó su tasa de éxito en disputas por contracargos del 40 % al 65 %.
- Por qué las penalizaciones de los programas de monitoreo de disputas van mucho más allá de la comisión por contracargo y cómo pueden afectar su relación con su procesador de pagos.
- Cómo calcular el coste real de un contracargo, incluidas las comisiones, las multas, los costes operativos y el daño que los contracargos causan a la reputación del comercio, que no aparece reflejado en el balance.
- Un recordatorio de que los contracargos de suscripciones casi siempre son un síntoma, no el problema en sí, y de cuáles suelen ser sus causas.
Deberías escuchar este episodio si:
- Eres un comerciante, especialmente si tienes un negocio de pagos recurrentes o basado en suscripciones, que actualmente está incluido en el programa de supervisión de adquirentes de Visa o te preocupa acabar en él.
- Son profesionales del fraude, el riesgo o los pagos que desean un análisis práctico de los factores que realmente generan disputas por contracargos.
- Utilizan o están considerando utilizar la IA para automatizar decisiones sobre cuentas, cancelaciones o respuestas a contracargos.
- Es un profesional bancario interesado en conocer la perspectiva del comercio electrónico y de los comerciantes sobre la gestión de disputas.
- Es un líder empresarial que evalúa si una política agresiva de suscripción o cancelación realmente permite ahorrar dinero o simplemente pospone un coste mayor.
Notas del episodio
La lección multimillonaria de Uber sobre las decisiones automatizadas
La Autoridad Neerlandesa de Protección de Datos acaba de imponer a Uber una multa de casi mil millones de dólares, la segunda más cuantiosa de la historia. La sanción se debió a un sistema de IA que desactivaba automáticamente las cuentas de los conductores sin una revisión humana significativa. El RGPD prohíbe tajantemente las decisiones tomadas únicamente por un algoritmo cuando afectan de forma significativa a la vida de una persona. Es una afirmación sobre la que todo comerciante debería reflexionar.
El programa de supervisión de adquirentes de Visa desde dentro
Una vez que un comercio supera su umbral de contracargos, se activa su inscripción en VAMP. Al superar el 1,5 %, la comisión por cada contracargo pasa a ser de 8 $. Esta es la parte de las disputas por contracargos que la mayoría de los comercios no comprende hasta que ya se encuentra inmersa en el proceso.
Qué está provocando realmente los contracargos de Hims & Hers
La demanda de la FTC presentada a finales de julio denuncia prácticas engañosas de facturación y cancelación. Las acusaciones relacionadas con la Ley para Restablecer la Confianza de los Compradores en Línea se refieren a cobros automáticos no anunciados. Estas demandas solo revelan lo que descubrieron los organismos reguladores. Para entender lo que realmente vivieron los clientes, debemos examinar sus propias quejas.
Gizmodo publicó 200 de las más de 4.800 quejas contra Hims y Hers presentadas ante la FTC durante los últimos cinco años, obtenidas mediante una solicitud amparada en la Ley de Libertad de Información. En casi todas ellas se repetían los mismos tres problemas. El patrón es claro: los motivos habituales de los contracargos en las suscripciones se reducen a cancelaciones difíciles, reembolsos denegados y condiciones de suscripción poco claras. Y, aun así, según numerosos testimonios, era casi imposible contactar con el servicio de atención al cliente. Cuando alguien no puede obtener ayuda directamente de la empresa, llamar a su banco e impugnar el cargo se convierte en su única opción real.
Análisis de la causa raíz de los contracargos
Identifique el patrón que subyace a las disputas. Es necesario informar a los comercios sobre las normas reales de Visa y Mastercard en materia de facturación de suscripciones y explicarles el verdadero coste de un contracargo. Los comercios no solo deben comprender las comisiones, sino también las multas, los costes operativos y el daño reputacional que se acumula con los contracargos a lo largo del tiempo.
Dónde está ayudando realmente la IA generativa en este momento
Varios comercios ya están utilizando herramientas de IA generativa para responder a contracargos. Introducen en ellas los reglamentos de Visa y Mastercard junto con los detalles específicos de la disputa, y dejan que la herramienta redacte una respuesta que cite directamente las normas pertinentes. Un comercio informó que esto elevó la tasa de éxito de sus estrategias frente a los contracargos del 40 % al 65 %. Un aumento significativo. La consultoría sobre contracargos sigue siendo útil para los comercios que no cuentan con los recursos internos necesarios para gestionarlos adecuadamente. Para los equipos que están empezando a explorar estas herramientas, este es un punto de partida realmente útil.
Conclusiones clave
- La desactivación automatizada de cuentas mediante IA sin revisión humana supone un riesgo jurídico real, no solo ético, como demuestra la multa impuesta a Uber por infringir el RGPD.
- El programa de supervisión de adquirentes de Visa se activa cuando se supera el umbral de contracargos, y las comisiones por cada disputa se acumulan rápidamente.
- Los contracargos de suscripciones casi siempre se deben a procesos de cancelación deficientes, condiciones de facturación poco claras o reembolsos denegados, no al fraude.
- Las herramientas de respuesta a contracargos basadas en IA generativa ya están ayudando a algunos comercios a mejorar significativamente sus estrategias para aumentar la tasa de resolución favorable de contracargos.
- La demanda de la FTC contra Hims & Hers, que incluye presuntas infracciones de la Ley para Restablecer la Confianza de los Compradores en Línea, ofrece un caso práctico real sobre lo que no se debe hacer.
- Las sanciones de los programas de supervisión de disputas van más allá de las comisiones y debilitan su poder de negociación con su procesador de pagos.
- El verdadero coste de un contracargo incluye comisiones, multas, gastos operativos y daños a largo plazo tanto a la reputación del comercio como a su historial de contracargos.
- Un buen análisis de la causa raíz de los contracargos comienza por buscar patrones, en lugar de tratar cada disputa como un incidente aislado.
- Facilitar la cancelación de suscripciones y la solicitud de reembolsos reduce en realidad las disputas por contracargos, aunque pueda parecer contradictorio.
- La consultoría sobre contracargos para comercios suele comenzar con la formación: la mayoría de las empresas no comprende del todo qué normas de las redes de tarjetas está incumpliendo.
Conclusión final
Las disputas por contracargos rara vez son el problema; por lo general, son el síntoma de otra cosa. Pueden indicar una suscripción difícil de cancelar, un servicio de atención al cliente lento o una política que da por sentado, de forma implícita, que la mayoría de los clientes terminará por rendirse. Los casos de Uber y Hims & Hers son muy distintos, pero ambos dejan la misma lección: cuando automatizas una decisión o dificultas deliberadamente que alguien recupere su dinero, no estás evitando costes. Simplemente los estás trasladando a una etapa posterior, donde se convierten en multas, comisiones y un daño reputacional mucho más difícil de reparar.
Recursos y enlaces del episodio
Conecta con Karisse Hendrick | LinkedIn
Presentadora del pódcast Fraudology
Experta galardonada en fraude cibernético
Consultora en prevención del fraude en el comercio electrónico
Asesora de startups, conferenciante principal y
consultora para empresas de la lista Fortune 500
Episode transcript
Karisse Hendrick
00:07
Welcome back to the Fraudology podcast. I'm Karisse Hendrick. Well, as you can see, it's just me today. Typically, I like to alternate between solo episodes and guest interviews, but this last week, the guests that I had planned for today's episode uh needed to reschedule. As we know, fraud fighters are very busy, especially these days. So, totally understandable. And you get me again. Uh, just like last week. But unlike last week, we're not going to do fraud news. There are two things in the news that I want to talk about and kind of dissect a little bit. But it's not going to be like news stories the way it was last week. We're just going to dive into two stories today. One is about Uber being fined almost a billion dollars by the Dutch government for using AI to cancel driver accounts. I happen to know that there are a lot of online companies that are turning to AI to cancel transactions, cancel buyer accounts, cancel seller accounts. In Uber's case, driver accounts, but in any marketplace, it would be like in the seller position. And I think it's really important to cover this because I haven't seen it before and I don't think they'll be the last company if everybody starts just relying on AI and not a hybrid approach of AI with human supervision. So, that'll be the first story. The second story we're going to dive into is a company out of the US called Hims and Hers. They provide um pharmaceutical supplements especially for weight loss and uh they are in some hot water with Visa. And what's unique about this is that typically companies don't get in the news when they're put on the Visa monitoring program for chargebacks. I'm not sure who leaked this that maybe it came out of a shareholder call or you know maybe somebody leaked it. I'm not sure. But usually this happens behind closed doors. There are some very large companies with big brands that you're very aware of that have been on these monitoring lists and no one has ever known about it. The only reason I know is because I know people that work there or they've contacted me uh for chargeback consulting to help them reduce their chargebacks to get off of the monitoring programs and stop paying all those hefty fees. So, we're going to dive into that a bit. I'm going to talk about what is causing their chargebacks, why I know that, as well as what I would tell them if they were a client. I think that this could be helpful to anyone who is struggling with their chargeback volume as well as just anyone that's interested in this. I know that there are banking people that are interested in the e-commerce side. So, I will share what I know. Uh those will be our two stories today. I do just want to make sure I remind you again that we have just less than five weeks until the Merchant Fraud Alliance first conference and get together. I am so excited. I am still a little underwater on finalizing the agenda. There's just a lot of moving parts and a lot of things that happen behind the scenes that cause things to take a little while. But hopefully uh in the next few days or week maximum from when this uh episode is being released, you will get to see a full detailed agenda with uh the dates and times of uh the sessions. Um again, it's October 6th and 7th. On October 5th, we're having an AI boot camp led by two people at PlayStation and one person at GoDaddy. Uh talking about how they're using uh generative AI to um supplement fraud operations. I've heard a lot of different ways that uh fraud managers are using generative AI for fraud. Uh one just this week was telling me that she's been using it for quality control uh for you know analysis on the decisioning that was made by her analysts. Usually, she would have to have one of her senior analysts or managers take a look at the decisions to one, make sure they're accurate, and two, write any rules that need to be written in their system to prevent orders like that from being accepted in the future. Or, you know, maybe it's the opposite situation where they're declining transactions that should be approved and maybe there's a rule that can be written to approve more transactions. So, she's been using generative AI for that. I know another merchant that's been using it to create a dashboard for alerts. So, you know, she plugs all of her metrics in there and, you know, sets up alerts for herself when they get past a certain threshold. There was another merchant this week that was just talking about how they're using AI to respond to chargebacks. They've input the Visa and Mastercard rules and regulations into the generative AI tool that they use and then they input the uh card holder documents and issuer documents for the chargeback. And then they tell the generative AI what the situation was from their perspective with their data. And they ask generative AI to create a response document that cites some specific rules and regs in the Visa rules and regs and Mastercards as well. And they've seen their chargeback win rate go up from 40% to 65% since doing that. I think that that's really interesting. I also think that there is something to be said for chargeback management companies. Not all of them. I will never say that. But there's at least one that I really think, you know, the thing that they add that uh generative AI can't is knowing how the processor and the issuer like to have their chargebacks. So what order do they like the information in? Do they prefer it to be faxed? Do they prefer it to be, you know, attached in all one document or separate files? There's so many different ways. They also, you know, know based on the issuer on the bin which chargebacks they should fight and which ones they shouldn't, which ones they'll win and which ones they won't.
Karisse Hendrick
06:55
So there is something still to be said for, you know, a chargeback monitoring company. Not necessarily the ones that claim to use AI. From what I've heard, their uh success rate has not been favorable, but it's still an option, you know, to look at. But I think if you don't have the budget to outsource, being able to respond, utilizing generative AI may be something to play around with. So, I kind of went off on a a minor tangent about using AI, but the whole purpose of the boot camp the day before MFA starts is, you know, it's merchant only. I think we only have I don't remember how many seats we have, but we or tickets we have for that, but it's free. It's free with the uh price of the ticket for the conference. Uh I think we just have a few more seats left cuz it's first come, first serve. Definitely won't be for every merchant that comes, but I know we at least can fit 50 people in the room. I feel like we might have gotten a bigger room for 100 now, but I don't know. I'm not uh I'm responsible for the content, not for uh the logistics part, thank goodness, cuz my brain just explodes with logistics. Um, but anyway, and then after the AI boot camp, we're going to have a immersion only happy hour sponsored by the same company that sponsors the podcast, Sardine, on the 99th floor of the Sears Tower or now the Willis Tower. I've been up there twice now. It's really cool. And you can only go to the 99th floor for private events. So, and usually if you want to go to the 101st floor where the tourist, you know, area is to like walk out on the on the glass, which I have also done twice, but never again. Uh you usually have to pay over $50 to do that. So, um it's a pretty cool experience. So, we're really looking forward to all the merchants uh that are already attending. And uh we still have tickets. I still have discount codes. So, if you want to send me a LinkedIn message, I will make sure you get one. Um, I'm just really excited about it and hope to see all the merchants that listen to Fraudology there. All right, so let's dive into the Uber story. Basically, I mean, I kind of summarized it a little bit at the beginning, but this Reuters article uh is titled, "Dutch Regulator finds Uber 966 million”, that's in USD, “for automating driver suspensions." So, this is published just this past week on August 21st. Uh, the Dutch Data Protection Authority has fined Uber €825 million, which is 966 million USD for deactivating driver accounts through automated systems without adequately informing them. According to an August 17th decision reviewed by Reuters, the penalty will be the second highest issued or second largest issued yet under the Europeans's GDPR. Uh so which stands for general data protection regulation. It is behind only a 1.2 billion in euro fine imposed on meta by Ireland in 2023 for unlawfully transferring European Facebook users data to the US. Meta is appealing. Uber said it would also appeal. We strongly disagree with this decision and disproportionate finest spokesperson said adding that the company takes drivers rights seriously and its policies include both human reviews and opportunities for drivers to dispute platform suspensions. The Dutch authority confirmed the decision later on Friday. Uber has committed serious infringements in deactivating driver accounts without warning or human involvement. The organization's deputy chair, Monnique Verier, said in a statement, From one moment to the next, they no longer had any. So, they're talking about drivers. From one moment to the next, they no longer had any income. A computer should not make decisions on its own that have such major consequence. European regulators have imposed billions of fines and penalties on large US tech companies in recent years under privacy, competition, and digital market rules. GDPR rules ban decisions made solely by company computer algorithms when they have a significant impact on people's lives, saying such decisions require meaningful human review and a way to challenge a decision. The case against Uber concerns European incidents in 2018 to 2022 stemming initially from a French complaint. It was handled by the Dutch regulator because Uber's European headquarters are in the Netherlands. I actually had a friend that was transferred to the Netherlands to work on Uber's payments team over there uh from the US. Fun fact, uh so I knew that that's where they were located as well.
Karisse Hendrick
12:08
Uh Swiss digital rights group personal data.io, IO, which helped the French Uber driver seek data about the algorithmic decisions affecting their work, eventually leading to the Dutch investigation, said it was pleased with the decision. Founder Paul-Olivier Dehaye or Dehaye uh said the group is preparing a class action suit against Uber seeking compensation for the drivers. So basically, I think the most important sentence in this article, GDPR rules ban decisions made solely by computer algorithms when they have a significant impact on people's lives, saying such decisions require meaningful human review and a way to challenge a decision. For all of those merchants that are working on automated decisions for transactions for buyer accounts or um seller accounts. That's something that you need to take into consideration and share with your leadership when they want to automate the whole thing. Understandably, it would make sense at on board boarding if a driver was declined, you know, the ability to make money or drive people if there was, you know, something wrong with with KYC or, you know, the the onboarding process itself. But it looks like they're talking about existing driver accounts, drivers that were counting on the income from Uber and had their account shut down. So something to be very aware of. All right. Now, let's dive into this Hims and Hers incident. So, various uh news articles picked this up, but I think Bloomberg actually uh broke the news. Um I cannot see the Bloomberg article because I didn't want to pay a subscription. Uh which actually will be kind of the sub kind of similar to what we're going to talk about with this company.
Karisse Hendrick
14:11
Um so like I said at the beginning of the episode, it's very rare for this information to become public. Um I wish that they said how they found out, but it could have been anyone. It could have been someone at the company. It could have been someone at the processor. Could have been someone at Visa. Um certainly not placing blame, just saying those are the people that would know about this. Um it could have been mentioned on a shareholders call. Usually it's not. However, these fees are quite significant because it's $8 per chargeback once you hit over 1.5%. So, um and that's on top of the chargeback fees you pay your processor uh and everything else. You know, the cost of responding to chargebacks, managing them, putting them into your system, etc. So, on the August 21st of this year, Bloomberg reported that Hims and Hers health, which on the New York Stock Exchange is just Hims was enrolled in Visa Inc.'s in acquirer monitoring program after customer credit card disputes in its weight loss subscription business exceeded acceptable levels in July. Each dispute carries an $8 sir charge resulting in a bill of nearly $75,000 due in September. And Hims must get its dispute rate below Visa's 1.5% threshold for three consecutive months to exit the program. I don't know if that's actually true now with the new with Vamp, but um VDMPS for three months, but I thought Vamp was just a month-by-month basis. A Him spokesperson said the company has seen a relatively small number of disputed charges. It's not relatively small if it's over one and a half% of your sales. Uh and has taken steps to address the issue. The news follows an FTC action from late July alleging deceptive billing and cancellation practices which Hims said it will vigorously defend against. Their shares fell as much as 9.5% with this news. Hims and Hers health itself characterizes the scale of the problem as small relative to its overall business. The company told Bloomberg that the disputed charges represent a relatively small transactions and the roughly $75,000 September sir charge bill is immaterial next to Him's overall revenue. It is a financial cost investors can weigh directly rather than an open-ended liability.
Karisse Hendrick
16:54
So there are some companies that make the business decision that they would rather pay for chargebacks and uh any fines or fees that are incurred because of them uh than cancelling transactions up front uh or having better uh customer service when people request uh their subscription be canceled. It's not a business decision that I recommend or stand behind, but it is one that I am aware some companies make. They say that they, you know, make a lot more in over billing people or, you know, not allowing them to cancel their subscriptions or other things like that. Uh, they make more money there than they do chargebacks because a lot of card holders don't seek chargebacks on subscriptions. Uh they just kind of take it as a hit and move on and that's what they're hoping for. So I don't know if that was the business decision that was made by this company or if that's just kind of what they're saying now that like oh it's insignificant it's a small amount don't worry about it like we're not worried about it. I'm sure their CFO is worried about it. I'm sure there are other people within the company that are also worried about it and I think they should be. Uh because eventually if you stay on the monitoring program for long enough, not only are you fined, you could lose the privilege of and that's what Visa and Mastercard call it is a privilege not a right to accept their cards on your website and then what do you do? So it isn't something to just kind of brush off. Weight loss demand continues to drive strong growth. Despite profitability issues in its weight loss segment, Hims keeps gaining customers at a rapid pace. In the second quarter, subscriber numbers grew 19% to 2.89 89 million people. While average monthly spending per subscriber jumped 21% from to $92, pushing total revenue up 38% to 753 million. This proves a key point for investors.
Karisse Hendrick
19:16
Billing disputes have not killed actual customer demand. Hims has a recent credible track record of resolving exactly this kind of billing and regulatory friction. Six months earlier, Hims resolved a legal dispute with Novo Nordisk over compounded GLP-1 drugs by striking a partnership that let it sell FDA approved OMIC and WGO directly. A deal that sent shares up 41.7% at the time. Evidence management can convert regulatory pressure into a resolved even positive outcome. Visa Inc. placed Him and Hers Health Inc. in its monitoring program after customer disputes for its weight loss subscriptions rose too high. Hims must keep its dispute rate below 1.5% for three straight months to escape the program. This penalty hits right as the FTC and state regulators sue Hims over tricking tricky billing and hard to cancel subscriptions charges that Hims denies. If forced to make subscriptions easier to cancel, HIMS will lose customers, lower retention, and shrink its subscriber revenue, which is exactly what I was just saying. They are weighing that out. I did a very quick Google search to find out what um what the complaints are. So, when I have a merchant reach out to me and say that they're on the dispute monitoring program, a lot of times they don't know why. Uh, I have a checklist to have them go through on their terms of service and their policies because a lot of times, you know, unless it's a straight up fraud attack, which in this case for subscription billing, it wasn't. Uh, there's nine times out of 10 or even nine and a half times out of 10, the merchant is doing something to increase their chargeback rate. And that's why there's fines and fees if they're over a certain threshold. A lot of chargebacks are just cause and effect. They're the effect of a different cause, right? The chargebacks are the result of having poor customer service or not shipping out what you described or, you know, not providing tracking for your users or uh, you know, so many other things. So, you know, it could be duplicate processing.
Karisse Hendrick
21:57
I, as a Kohl's customer, just got an email the other day. Well, actually, I first got the alert from my bank that I had a new charge from Kohl's, and I was like, I haven't made a purchase at Kohl's in over a month. I was donating to a back to school drive. They needed some clothes of a specific size. And so, I placed an order at Kohl's because they had good sales. And then about a month later, I see this random charge on my account. But when I looked it up, it turned out, well, actually, I think Kohl’s sent out a email before I looked it up, but they announced that they had had processing errors. I can guess what those processing errors were. Uh, but that's not important. This isn't a payments uh podcast, so I won't uh nerd out on payments for you. But um had Kohl's not moved quickly to resolve that, I could have called my bank and said, "Hey, I didn't pay for this a second time. I didn't order anything else. This was duplicate processing or refund not issued." And so I could have issued a chargeback during that time. That's why Kohl's moved so quickly. That was something that Kohl's did on their technology side. Probably a total mistake. It was over the course of like 10 days, I think, or something like that. But they righted it right away. They issued a refund. Uh, and then they also issued an email with an extra $20 off coupon uh of I think a $100 purchase, which is great and really I think a best practice, right? Not only are they righting the wrong, but then they're trying to regain your trust. I would say the majority of these customers that are complaining about Hims won't never be back. They're you you've lost them forever. Uh because they're complaining about policies and and things that you've set in place. Um, and because it happened in July and the FTC also put their fines in July, something tells me that someone within the company made an executive decision or a group decision to stop it make issuing refunds or, you know, making it really difficult for people to cancel their account. Once they did that, the effect of that cause was chargebacks and also FTC complaints and better business bureau complaints and complaints on Yelp and complaints on Reddit and uh on Google and there anywhere that you can make a review. I've seen complaints about Him or Hers just from like a very cursory Google search. I just searched Hims and Hers reviews complaints and the first complaint it says that consumers have is that consumers report expected unexpected automatic renewal charges without advanced notice. Many complain of hidden recurring fees and being trapped by subscription dark patterns. Customers also state that reaching customer support is difficult. And even when they request cancellations or refunds prior to shipping, they face denied refund requests under strict no returns on medication policies, even if the product hasn't been shipped yet. The FDC and state regulators have target targeted Hims and Hers over deceptive privacy practices, health data sharing disclosures, and violations of the Restore Online Shoppers Confidence Act. Regarding unannounced auto billing, unannounced auto billing is bad. Like some there are some companies that if they get into trouble and they're a recurring merchant, say that their recurring charges all happen on the 15th of the month, but they're starting to lose cash at on the 5th of the month and they're they're running out. They may not have enough for uh payroll or real estate or whatever the you know the bill is for. So, they'll just run all their credit cards before the 15th. That is also a big no no. Um, I don't know if that's what this company was doing, but just throwing it out there that if the subscription date is for the 15th of the month or the 30th of the month or whenever it is, you need to honor that and not uh process too early.
Karisse Hendrick
26:32
Those are kind of the summaries on Google. Um, what I wanted to then read was, uh, a few customer reviews. They were compiled by Gizmodo in an article titled, They are thieves. FTC complaints about Hims and Hers detail surprise charges. Last week, the FDC filed a lawsuit against telehealth company Hims and Hers for allegedly disclosing private health information to third parties and for engaging in shady subscription subscription practices. Gizmodo filed a Freedom of Information Act request with the FTC for consumer complaints against this company, which will help give an idea of how prevalent these practices are. Hims and Hers sells both prescription and over-the-counter medications for conditions like hair loss, obesity, erectile dysfunction, as well as mental health issues. The company also connects patients with prof with health professionals who can advise them on the drugs they take. But some customers alleged some major issues. The FTC told Gizmodo that it has over 4,800 complaints related to Him and Hers filed over the past 5 years. So that's a little under a thousand complaints a year. It actually doesn't seem too bad if they have 2.8 million subscribers, but something tells me those aren't active subscribers because they didn't say they were active subscribers. They just said 2.89 subscribers. So, there's a difference, right, in who's paying and who's not. Though only 200 redacted complaints were reviewed for released for review. The most common complaints involve consumers who say they were charged for subscription services they didn't want and were denied a refund when they asked for one. Other complaints involve a lack of real medical advice when getting a prescription and many people complain that they were unable to reach customer support. People who were eventually able to connect with a customer service representative tell of still being unable to cancel unwanted subscriptions even when the items haven't shipped yet.
Karisse Hendrick
28:51
On January of this year, a complaint from a woman in Maine tells of how she purchased a 6-month supply of the weight loss drug and was completely surprised when she was charged for another 6 months after that. And if she paid for six months all at once, then chances are she was billed for another six months, not six monthly bills. I did not use this business anymore, and I don't remember ever signing up for another six-month supply, especially since I am being prescribed a different weight loss med through my own doctor who is monitoring my health, the complaint explains. Now, we're having a difficult financial time because of the weather, and my husband works in the Atlantic Ocean in the cold and windy days. He cannot go out due to being rough water. So, now we don't have the $1,500 we had saved to pay bills during this time of bad weather, and it has been stressful. So, this customer was saying that, you know, with Him and Hers auto charging their subscriptions, it's taken out of their money for bills. One person in Oregon complained that they didn't know how they were going to buy groceries for the next week. Still, another user in New York complained that the sub surprise subscription charge had caused their checking account to be overdrawn by $235. On one of the more disturbing complaints among the 200 released to Gizmodo involved a patient struggling with mental health issues. A loved one of the patient told of how he was charged without even receiving any psychiatric care. His bank account was already negative and they charged him even though he had not spoken to a psychiatric care provider. They charged him $165. The complaint reads, "He struggles with depression and harmful thoughts. This experience caused severe anguish and he was left on the phone trying to call both his bank and the Him site for hours. No one picked up. This should be illegal. Visa does have rules about that. Uh you are to be providing a working phone number and contact information where you know someone in customer service or just someone at the company can answer questions, can uh cancel uh subscriptions uh all kinds of things. The complaints seem to confirm what the FTC has alleged in its lawsuit about shady subscription purchases or practices through Him and Hers is far from alone. As many companies in the 2020s rely on people being signed up subscriptions that they don't want. They just hope you don't notice.
Karisse Hendrick
31:37
Hims and Hers didn't respond to a request for comment on Thursday about the complaints, but it previously directed Gizmodo to a public statement insisting that the FTC contorts the law to try to manufacture claims. I don't agree with that. Gizmodo will update this article if we hear back from the company about the complaints we received through the Freedom of Information Act. Gizmodo was unable to independently verify each claim because they were released in a redacted form to protect the privacy of those who submitted the complaints. But Gizmodo is publishing some of the unedited complaints below because patterns emerge to collectively tell a story with similar problems while dealing with Him and Hers. Whenever I do uh chargeback analysis that the first thing I look for is the patterns, right? The patterns in the chargeback reason codes, the patterns in the bins, uh the bank identification numbers, the patterns in the items that are being purchased uh and then look for the outliers. One person from Washington in January 2026 said, I am filing this complaint to request a full refund due to serious problems with both the product and the medical support I received from Hers. I purchased an 8 week supply of compounded semaglutide through Hers for $650. I chose this company because I had previously used compounded semaglutide from another provider and had excellent results. However, the medication supplied by Hers, sourced from Stive Pharmacy, produced no results for me at all. The only effect I experienced was fatigue. I was unable to complete the full course of treatment because the medication was ineffective and because I received no meaningful medical guidance from Hers. Even if I wanted to continue, I did not have enough needles to complete the full program, which made finishing the treatment impossible. Despite the program being advertised as a clinician guided care, I received virtually no real medical support. I contacted the Hers care team multiple times to report that the medication was not working and to ask for help. Each time I received only generic automated responses that did not address my concerns. Most concerning leading instead of receiving actual medical guidance, I was sent messages encouraging me to purchase additional products such as Hers meal replacement bars. Rather than helping me with my lack of results, the company attempted to upsell me more items. This felt like a sales tactic instead of legitimate medical care. Hers relies on a restrictive refund policy that makes it very difficult for customers to receive their money or their money back even when the product is ineffective and the promise support is not provided.
Karisse Hendrick
34:41
This policy combined with the misleading marketing and automated service appears to appears designed to protect the company rather than the consumer. Between the ineffective medication, lack of adequate supplies, absence of meaningful support, and unfair refund policy, I did not receive what I paid for. Because of these issues, I'm requesting a full refund of $650. Someone else said that at no point during checkout was it clearly disclosed that this charge would enroll me in a recurring subscription. That's also against Visa rules and regs. That customers need to be aware that there will be, you know, that they're enrolling by making this purchase. They're enrolling in a subscription based product and the next item will be sent, you know, monthly or quarterly or half yearly depending on how the customer set it up to begin with. I think there were a couple others about not being able to cancel the account. Someone said it's a shady system. They have not yet responded to date. Uh people have asked to cancel their subscription um but they are being told that they can't. Additionally, it's very difficult for them to get a hold of customer service to cancel the the recurring charge. And I would venture to guess just based off of what I've read that Hims and Hers do not have an automatic refund request uh process or or policy. Making it difficult to contact customer service to cancel a subscription is another way to do it. Um another way to get lots of chargebacks uh because you know you are required by Visa and Mastercard to have easy enough ways to cancel subscriptions. Uh, sounds like the only way to cancel a subscription uh, through this company was by contacting customer service. And oh, by the way, customer service was really difficult to get on the phone.
Karisse Hendrick
36:41
Uh, best practice is to have an automated way for their for your card holders to cancel their account. Uh but like I said before, there are companies that have made business decisions that they would rather uh make it really difficult to cancel a subscription than uh to lose out on all that money because they're hoping people will just give up and unfortunately a lot of them do. So if I were a consultant at this company, like I said, the first thing I would do is find out what are their issues, right? Um, sometimes it's a mean, you know, it's one single customer service rep that either doesn't issue refunds or is incredibly rude. You know, not telling them that the subscription is going to be renewed at the end of the term is also a good way to get increased chargebacks. Having ineffective merchandise uh is another way to get chargebacks. All of these things are, you know, it doesn't surprise me if this is these are their business tactics that they're going to get more chargebacks. That's just like I said, it's cause of effect. I think that was the only article, the last article I was going to read. Um, so the next thing I would do is educate the merchant on the um terms of service with Visa or the rules and regulations with Visa and with Mastercard as it pertains to subscription billing. Similar just like I just explained just a minute ago, right? They need to have it clearly posted on the bill uh on the credit card bill, you know, where the purchase was from, what it was for, and how to contact customer service. They need to have how to contact customer service and or refund or uh cancel your subscription on their site. So they because they've been Oh, and then on top of that, when someone asks for a refund, you need to give it, especially if the merchandise hasn't been, you know, shipped out yet.
Karisse Hendrick
38:43
That's ridiculous. And even if it has been shipped out, you can either uh opt to eat those costs or, you know, fight the chargeback or or whatever. But um that's where we're at. So um you know, I would explain to them the rules and regs. I would explain to them um the fines and fees that will continue to come. Um and I would explain that this is just a really bad customer experience. Like I said before, all of these customers that are having this bad experience aren't just going to never use your product again. They're going to tell at least 10 people. So, there was an older study or at least a saying that said if someone had a good experience with a company, they might tell one friend, but if someone has a bad experience with a company, they're going to tell at least 10 friends. And with online reviews, they can tell thousands of people about their experience. And that's going to prevent you from getting new customers. So, I very much am on the side of having good customer service, allowing people to cancel their accounts when they want to. Uh, offering refunds to reduce your chargeback risk is also important. Um those are all you know and I'm also a big you know proponent of making it easier to cancel the subscription um through customer service through the website whatever it is. I would argue with executives if they said well we are making more money by doing it this way than uh we would if we did it your way. I would say, Well, but that's not money you get to keep, right? And I would do a true cost of a chargeback and do the math for, you know, how much the add up the chargeback fee, add up the uh the extra fine from Visa, the $8 a pop. I would, you know, add up any kind of operational costs for managing those chargebacks. I would also require, so I would I would add all those up for the true cost of a chargeback, right? This is what's actually costing you. And then by the way, all of these bad reviews, these FTC fines, as well as uh just negative press and bad brand trust is actually losing you a lot of money in in the future because people aren't going to want to go to you if they think that they won't get their money back or that their card might be might be charged when they weren't expecting it to. I would also require the uh company to when a chargeback is issued to cancel the subscription. It looks like that might also be an issue of people thinking, well, I'm going to call my bank and cancel the subscription. Well, the only thing your bank can do is issue a chargeback. So, that's what they do. And most companies have a process in place that once they receive a chargeback, they cancel the subscription. But I don't not sure if that's the case here. Additionally, if Hims and Hers expands or already is in the EU, they're required to give consumers a heads up before their card is charged. Granted, it's just in the EU, but some companies do it across the board for their US customers as well. I know my car payment. They always, you know, tell me when it's due, when they're going to charge the, you know, transaction fee, the recurring charge.
Karisse Hendrick
42:27
Um, and then they send me a receipt afterwards. So, you know, that's really good communication. Now, granted, I'm I'm not just going to cancel my payment for my car, uh, because I would like to keep that, but for other things, too. I know there's a couple subscription services like streaming services that do that as well. Hey, your annual fee is your annual subscription is going to be recharged on December 5th or whatever the date is, that gives you a couple of days to reach out to them and say, Oh, wait. I meant to cancel that. But yeah, in the EU, if they don't give them a way to cancel, as well as if they don't give them a heads up that they're going to charge their card, they can be fined even more or lose the ability to transact in the EU. So, that's another point against this philosophy that I don't agree with. It's also important to analyze the different types of chargebacks. Looks like they have different billing cycles. They have a month-to-month, they have a six-month, they have a 12 month. I would be doing some analysis on, you know, which one of those programs is costing you the most money and, you know, working around that. For instance, if you're getting the most chargebacks around the annual fee because it's higher and because, you know, a person signed up for it a year ago and and doesn't rem and most likely doesn't remember it, does not remember when it's going to be recharged. If I saw that there was a high percentage of chargebacks on those annual fees, I would suggest to the customer that they send out an email every year saying, Hey, just a heads up. Your uh you know, Hims or Hers account is about to renew. Um where you know, please let us know if you're having any issues. Oh, and then the other way that they're doing chargebacks is just by having an ineffective product. Some people have, you know, uh, complained that it didn't work. So, that's another reason why you can have high chargebacks because people may call for a refund and say, Hey, that weight loss drug that I tried or you know, whatever else they they do there. So, anyway, that is how I would work with them. There are a lot of subscription companies that don't care and they're going to get fined and feed or you know get fines and fees and on top of that when you are in the monitoring program it is much more difficult to get a new payment processor. If you want any kind of leverage at all with your current payment processor you need to be in good standing because they know that you can't leave if you're on a dispute monitoring program. So, they might just increase their fees on you. It I've seen it happen before. Increase the chargeback fee, increase the transaction fee, whatever they want to do. Uh they might include an additional fee to fight the chargeback. There's just, you know, a lot of things there. So, that's why I wanted to dive into that today is because I think that there's just a lot of lessons that can be learned from this. And I'm a big believer in learning other people's lessons so you don't have to learn them yourself. And that's what I suggest for merchants, especially recurring merchants. It's just that combination of charging cards without giving a heads up and not making it easy or even possible in some cases to cancel an account in advance and not letting them get a refund once that charge has been processed and not having a way for them to contact customer service. Like all of those things are adding up to cause those problems. So, it needs to be changed for so many reasons. It's been a little while since I've talked chargebacks to this level uh on the podcast, but I hope uh that you uh learned a couple things, maybe hims and hers are going to listen. I mean, if they are and if they want more advice, they should come to MFA. Uh they can learn it from their peers, not just me. All right. Well, with that, I'm going to call it an episode for the day.
Karisse Hendrick
46:54
Uh, I am hopeful that I am going to have a guest next week. Uh, really good guy with lots of interesting experience. Um, I have a few other interviews lined up over the coming weeks. And I hope you guys are having a good end to your summer. I uh we're just starting to get a little bit of that crisp air uh you know, crisp breeze in the air uh up in uh Washington State. Um so I can tell that fall is coming. Uh I always know fall's coming when I'm like, Oh, my birthday's in two weeks. Oh, yeah. Fall's going to be here soon. Uh all right. I hope that you enjoyed this episode. If you have any feedback or questions or a suggestion for another topic you'd love for me to deep dive, please let me know. The best way to get a hold of me is via LinkedIn. To my knowledge, I'm the only Karisse Hendrick certainly that spells it that way on LinkedIn, so I'm easy to find. All right, with that, I am going to talk to you more next week.
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