Filtering false positives while fighting fraud

Three best practices foiling the 'bad guys' without declining members' legit transactions.

Falling victim to card fraud is a deeply distressing experience, yet it is an all too common occurrence—costing U.S. card issuers around $8 billion annually. This makes preventing fraud such a serious business that sometimes-legitimate transactions are incorrectly identified as fraudulent.

Incidents in which bona fide customers are mistaken for fraudsters are known as “false positives,” and these can also prove costly. Javelin estimated in 2015 that 15 percent of all cardholders surveyed had at least one transaction incorrectly declined in the prior 12 months, representing almost $118 billion declined annually. This can damage the relationship between the consumer and the card issuer; according to Javelin, almost four out of 10 (39 percent) cardholders who experienced a false positive subsequently abandoned that particular card after the declined transaction.

Credit unions and other financial institutions face a difficult balancing act between detecting suspicious and fraudulent activity and needlessly inconveniencing consumers to the point that they will no longer be willing to use your card. How do you help the good guys while foiling the bad guys?


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