False declines pose a significant issue for online businesses. They’re often an unfortunate side effect of using outdated, legacy anti-fraud prevention.
False declines are legitimate transactions that have been blocked and labeled as fraudulent.
The question is: How common are they really?
How Common Are False Declines?
Before we dive into just how common false declines can be, it’s important to note that assessing your business for false declines can be tough. You’ll need to analyze your past transactions and determine which ones were genuinely fraudulent and which ones should have passed.
With typical brick and mortar type businesses, false declines occur less frequently. This is because a physical card is given in-person and the transaction will nearly always go through.
False declines are more common with online merchants. Instead of providing a physical credit card to be charged, the information associated with the card is provided. This includes different information such as:
- Cardholder name
- Card number
- Security code
- Expiration date
This process for online transactions makes it much easier for fraudsters to make purchases on fraudulent cards, since they don’t need the actual card itself. They simply need to steal the information necessary to make the purchase.
Taking it one step further, false declines are even more common with brand new shoppers, as opposed to reoccurring ones.
New online shoppers are 5-7x more likely to be declined than returning customers by current fraud tools.
In fact, this phenomenon has become so common that Forter has created a term to describe the quick rise in false declines: New User Missed Opportunities, or NUMO for short. Merchants are continuously missing out on new business due to outdated fraud prevention being biased and not having enough identity data to accurately verify the legitimacy of brand new shoppers.
While it’s true that fraudsters are pervasive in the e-commerce space, and fraud prevention tools are necessary to implement in order to better protect businesses, it’s important to remember that these same tools can block legitimate transactions at an alarmingly high rate.
You may not think that your business has a problem with false declines, but they’re far more common than you think. Because of this, why not look into Forter’s Payment Protection service? With it, you can keep your business protected from fraudsters and reduce false declines by up to 90%. We can work together to protect your finances and keep your reputation intact.
How Much Are You Missing Out On?
Curious to see how much business you could be losing? Get our free NUMO report to find out.