Strategic Prompts Can Unlock Hidden Upsides in Dispute Management

Executive Summary

• Banks that auto-resolve claims under $50 boost customer satisfaction without materially increasing losses, while top performers resolve 49% of disputes automatically compared to just 8% industry-wide.
• Institutions often spend an hour validating $20 claims while high-value disputes miss deadlines. Smarter triage and resource allocation can increase recovery rates from 62% to 85%.
• Strategic automation can improve productivity by up to 180% over industry averages, reducing errors and freeing investigators to focus on complex cases that actually require human judgment.

When it comes to dispute resolution, many financial institutions aren’t getting full value for their efforts and continue to struggle on the fundamentals. Consider the following data points:

• on average, it takes 10 to 11 days to issue credit after a dispute;
• average fraud loss rates hover around 40%;
• fewer than one in ten disputes are resolved automatically;
• and only 62% of disputed dollars are ultimately recaptured.

Drawn from Quavo’s 2025 State of Dispute Management Performance Report, statistics like these carry wide-ranging implications — for customer relationships and employee well-being, as well as in dollar terms.

According to the report, most institutions still rely on manual processes, which drive up labor and compliance costs and delay resolutions — amping up the pressure on internal teams and eroding customer loyalty. A separate consumer study by Quavo says that two-thirds of consumers would switch banks over a drawn-out or confusing dispute experience. And while fraud losses may not loom large on most P&Ls, their ripple effects, from higher operating costs to lower customer retention, can have meaningful financial implications.

With much at stake and many variables in play, institutions aiming to improve their dispute management operations face a complex challenge. Some remedies are straightforward, like increasing automation or improving communication throughout the resolution process. Others require rethinking long-held assumptions.

Following are five ways in which conventional wisdom is leading financial institutions astray — with insights into how new strategic thinking can get your organization back on track.

Want more insights like these? Check out Quavo’s content hub: Building Trust: Best Practices in Fraud Response and Resolution

1. See the Forest (Not Just the Trees)

Most dispute resolution teams that seek to optimize their operations do so from the bottom up, analyzing and refining how an individual claim is handled. Instead they should first get a handle on the big picture, identifying the systemic issues that may be driving losses. Quavo’s benchmarking data bears this out: Institutions that follow performance management best practices can increase recovery rates to as high as 85%, in contrast to average levels ranging from 57% to 78%.

Somers offered the example of investigators who may routinely spend an hour validating a claim worth just $20 — yielding a negative ROI once labor costs are factored in.

Meanwhile, the volume of these low-dollar cases crowds out higher-value disputes that have hard regulatory deadlines. Such imbalances often go unnoticed until performance data is aggregated and analyzed across the organization. Representments, which funnel significant effort into cases whose outcome rarely changes, are a frequent source of this problem, she said.

Examining how much time and expense go into these low-dollar cases can help institutions rebalance their approach — automating or writing off where appropriate, while concentrating investigative time where the potential recovery justifies it.

Tracking and analyzing recovery outcomes, and closely monitoring merchant activity, allows teams to close cases quickly when refunds have already been issued and to focus their attention on representments that genuinely warrant review.

2. Write Off More

As they begin to take a closer look at their overall performance data, some institutions may find that the quickest path to better results is to stop chasing every dollar. Quavo’s data shows that writing off low-value disputes immediately can meaningfully boost customer satisfaction without materially increasing losses.

Yet across banks, processors, and credit unions, only about 8% of disputes are resolved through auto-pay — which means more than nine in ten require extended manual handling. In contrast, Quavo’s top performers resolve 49% of disputes automatically.

Given customers’ demonstrated preference for fast resolution, institutions should consider ratcheting up trigger levels — perhaps as high as $50 — for automatic credit reimbursement. The win-win is that the customer moves on with increased trust and satisfaction, while the issuer avoids a costly resolution process, and may still be able to recover funds later on.

“You’re decreasing your overall operating costs, creating a lasting impression and building loyalty with a customer who’s going to continue to drive revenue,” said Ike Sullenberger, Account Manager at Quavo Fraud & Disputes.

3. Do Less

Excessive manual effort has many negative knock-on effects. It can hinder investigators’ ability to deliver exceptional service by introducing more opportunities for inconsistency and delay. Those delays in turn contribute to customer frustration. And all of these factors, over time, can weaken internal teams’ trust in their organization and drive burnout.

According to Quavo’s analysis, institutions that simplify workflows through strategic process automation have achieved productivity gains of up to 180% over the industry average. Fewer manual steps mean fewer errors, lower costs, and more time for investigators to focus on cases that require expertise and judgment. The best-performing institutions are reimagining the role of a dispute investigator and proving that less really is more.

4. Triage Smarter

Like hospital emergency departments, dispute resolution units must ensure they’re applying the right kind and quantity of resources, in the right proportions, at both the intake and the treatment level. The natural inclination may be to err on the side of “treatment.”

But while that might be a good approach for a hospital, it’s likely the wrong approach for financial disputes. Moving all disputes as quickly as possible from intake into resolution may create the appearance of efficiency, but will likely result in downstream bottlenecks and overall inefficiency.

In one case described by the team at Quavo, a financial institution had divided its ten-person resolution team evenly between fraud and non-fraud cases, even though 90% of its disputes were fraud-related. Chronic backlogs and repeated CFPB audits continued until finally the institution rebalanced staffing to reflect the true workload.

As a result, days-to-resolution dropped by nearly two weeks and loss rates fell 7%, saving $2.8 million annually. Quavo’s research backs this up: banks that allocate talent and automation based on dispute value achieve recapture rates up to 80%, compared with an industry average of 62%.

Dispute queues should be segmented based on transaction value and resolution complexity. The idea is to avoid overinvesting in low-impact cases and under-resourcing those with material financial or compliance exposures.

“You may be spending 45 days investigating a claim because you want to investigate it the right way and do what’s in your customer’s best interest,” Aafie Somers, Content Marketing Manager at Quavo Fraud & Disputes, said. “But the value of the claim may not be worth the time you’re spending on it and meanwhile, from your customer’s perspective, that 45 days is 45 days too long.”

5. Realign Outsourcing

The benefits of outsourcing dispute management operations look simple from a distance: offload caseload, reduce payroll, and let specialists handle the work. The problem is, many BPOs bill by the transaction and by the exception, which “goes against the grain of the institution’s goals,” Somers said.

A better model for the financial institution would reward outcomes not activities, to drive measurable gains in, for example, NPS and customer lifetime value. Industry analysis further highlights this trend: legal guidance today increasingly recommends designing outsourcing contracts with shared-risk and performance-based structures that reward providers for meeting or exceeding key KPIs.

Unlocking Resolution’s Potential

Banks and credit union strategists seeking to elevate their dispute management capabilities face a challenge that’s both simpler and more demanding than it appears.

On one level, institutions need only apply the same standards of operational excellence to dispute management that they apply to other business functions. But on a deeper level, it requires redefining what excellence in dispute management means — seeing it as a strategic, value-adding function with direct implications for financial performance, customer loyalty, culture, and reputation.

One way to start the process is to question your core assumptions and see where those questions lead: Seeing the forest for the trees models excellence in leveraging operating data. Writing off more disputes accelerates resolution and builds loyalty — and also conveys a sense of proportion and care to both customers and team members. Doing less through automation, implementing smarter triage, and aligning incentives with outsourcing partners all ensure direct resources are applied to what matters most.

In an era of diminishing trust and rising fraud — when customers increasingly demand experiences that meet them where they are — dispute management can become a competitive advantage.