At the recently held CNP Expo in Orlando, Florida, false positives were among the most talked-about subjects. Attendees were also highly interested in issues concerning measuring and preventing negative impacts on legitimate customers from companies trying to prevent fraud.
Fraud Prevention
In the past few years, more advanced fraud prevention systems emerged to ensure fraud can successfully be fought. Still there are many legitimate customers who are being wrongfully declined by those systems.
With years, fraudsters have developed certain behavior to look more legitimate. On the other hand, there are real customers who use their own cards for orders that seem risky. As a result, some fraud orders get completed successfully, while some legitimate sales get held for several hours or just canceled. This could not only lead to the loss of the immediate sale, but also to customer retention.
It is critical for merchants to find a reputable payment processor like eMerchantBroker to apply for a reliable merchant account for their company. EMB, #1 high risk processor in the US, boasts an A+ rating with the BBB and offers unmatched protection to prevent fraud and reduce chargebacks.
The Impact of False Positives on Your Business
Identifying false positives is the biggest challenge to deal with. If fraud orders are not canceled, they usually result in chargebacks. False positives, however, are always revealed.
It is important to note that not all companies alert the fraud department even if a customer contacts them to ask about the cancellation and prove his/her legitimacy. Below you can find the best practices some merchants apply to identify and measure the impact of false positives on their business:
- Work with Customer Service to forward customers’ calls to the fraud team. Do this either at the time of the call or flag and get back to the cardholder later.
- Prepare a Report on Customers whose orders were canceled because of fraud but who placed a 2nd order during the next week that was not canceled due to a suspicion of fraud.
- Have the Fraud Team’s Senior Member Review The 2nd order should be canceled if it was fraudulent. The customer should be added to a white list and the volume should be tracked to figure out the false positive rate.
- Have an Additional Fraud System or some other additional means to review the orders that were canceled. Do this for a certain period of time to find out if those orders were truly fraudulent.