Published June 18, 2018

What is a False Decline?

False declines, otherwise known as false positives, occur when legitimate orders are rejected because of suspected fraud.

This is a problem because if fraud protection measures are too tight, businesses could be losing revenue by denying good customers. When customers have transactions declined, they are unlikely to shop from that store or brand again. A company then loses not only the initial sale but also any future revenue from the customer due to repeated purchases or recommendations.

Often false declines happen through no fault of the merchant, but they often occur when a fraud solution is too strict, which means that good orders get caught up with the bad.

For instance, some systems can flag orders purely on the basis of billing and shipping address mismatches, which is often a sign of fraudulent orders. The problem is, a system like this could also be declining a large number of real customers who are in the process of moving or doing things like sending gifts abroad.

This is why more modern systems consider several attributes together and know to weight the risks accordingly. While some fully automated systems rely solely on machine learning to solve this problem, doing this can be costly and cause brand reputation issues during the initial learning curve.

Therefore, it is important to have a fraud solution that combines the benefits of automation with the value of human oversight. Instead of replacing the role of the merchant entirely, fraud solutions should focus on providing actionable intelligence so that merchants can make a sensible judgment call and more effectively manage their business.

NS8 Protect and NS8 TrueStats offer an effective way to reduce false declines. Merchants can use the order rules to not only adapt their fraud prevention measures to the needs of their individual business, but they can adjust their approach to become more effective over time.

By utilizing a scoring metric that automatically filters out both the obviously fraudulent traffic and a company’s known good customers, businesses can focus their attention on the small number of orders that need extra consideration and reduce their rate of false declines.

NS8 Protect

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