ARC Outlines Progress on Debit Memo Front

In 2014, the Airlines Reporting Corp. reviewed 44,000 debit memos to sort out their root causes.

Shelly Younger, manager of settlement services at ARC, was part of that endeavor, and she concluded that “nuclear physicists have an easier time.”

The cost to the industry of issuing debit memos is $140 million a year, so both airlines and agencies have a vested interest in keeping them at bay and streamlining processes.

At ARC’s second annual TravelConnect users meeting, Younger described some of the work that has been done by the Debit Memo Working Group, comprising airline, agency, and GDS representatives. It was formed in 2013 to tackle the eternally irksome issue.

Younger said exchanges are the most common generator of debit memos, but drilling further down is challenging.

“The description of the cause is a free-form field,” she said. There has been no standardization — until now.

The group has completed the major categories of reason codes, Younger said, and is now working on subcategories.

It also is adding links to carriers’ written exchange policies where they are available.

ARC also has addressed another debit memo issue: GDSs couldn’t dispute through Memo Manager, ARC’s application for the electronic processing and settlement of debit memos.

“We’ve added the ability to correspond with the carrier through Memo Manager,” Younger said.

The ratio of debit memos to transactions has dropped over the past two years, she said.

In 2013, one debit memo was created for every 249 transactions through ARC. Today, one is created for every 365 transactions.

But the bad news is that the dollar amounts of debit memos are being pushed up by credit card chargebacks, which represent 23% of the volume of debit memos but 32% of the dollars involved.

Some relief on chargebacks came on Oct. 15, when Visa began accepting airline-supplied flight manifests as a remedy for fraud payment card chargebacks for “friendly fraud.” That’s when a cardholder claims fraud for a flight that he or she has flown.

If the carrier can provide a manifest on which the passenger name matches the cardholder name, the chargeback will be reversed.