Addressing the Threat of False Positive Declines
- Date:October 17, 2018
- Author(s):
- Kyle Marchini
- Report Details: 18 pages, 13 graphics
- Research Topic(s):
- Fraud Management
- Fraud & Security
- PAID CONTENT
Overview
In the fight against credit and debit card fraud, merchants and issuers unwittingly create unintended casualties when they decline a legitimate cardholder’s transaction because of suspected fraud. No one wins when a “false positive” decline happens, and yet such denials occur with alarming frequency. In 2017, fraud-related false positives affected roughly 1 in 15 (6.7%) consumers, but the challenge of addressing this threat will only grow as fraudsters shift their tactics to target online and mobile retailers. Effectively combatting false positive declines requires a collaborative approach between merchants and issuers to share data that enables both parties to distinguish between fraudulent and legitimate cardholders.
Key questions discussed in this report:
- How prevalent are false positive declines in the US today?
- What groups of consumers are most at risk for false positive declines?
- How do false positives impact cardholder loyalty to issuers and merchants?
- How are fraud trends impacting issuer and merchant authorization strategies?
Methodology
Consumer data in this report was primarily collected from the following:
- A random-sample panel of 5,000 respondents conducted online in November 2017. The overall margin of error is +/- 1.39 percentage points at the 95% confidence level for questions answered by all respondents.
- A random-sample panel of 3,000 respondents conducted online in October 2017. The overall margin of error is +/- 1.79 percentage points at the 95% confidence level for questions answered by all respondents.
- A random-sample panel of 3,200 respondents conducted online in November 2014. The overall margin of error is +/- 1.65 percentage points at the 95% confidence level for questions answered by all respondents.
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