Preventing False Declines and Fraud in E-Commerce

Sep 19, 2019

The number of both fraud attacks and false declines is growing. Are you working on preventing false declines? Do you have a secure payment processor to rely on? Not sure? No worries! This article will help you with preventing false declines easily.

Preventing False Declines

Let’s start with the so-called “friendly fraud.” It’s to do with cardholders wrongly disputing purchases made by themselves or someone else in their family. The bad news is that friendly fraud has made false declines grow to a huge extent.

What about these false declines? Well, they’re also called “false positives” and represent valid transactions that issuers and merchants wrongly reject as fraudulent.

Overall, if you want to avoid facing problems while growing your e-commerce business, you must invest in the customer experience from the very start. Here, it’s critical to never leave the checkout experience in ignorance.

Specifically, you need to work on improving the process by optimizing the omnichannel experience. Next, it’s important to provide a variety of payment methods and use artificial intelligence (AI) for the automation of the basic steps concerning the buying experience.

The growth of fraud and false declines has created several challenges for the market, thus making e-commerce merchants turn to layered fraud solutions more often than in the past so to enjoy loss reduction.

In fact, these false declines are away from being low cost. Why? The thing is that they not only result in financial issues but also in deteriorated relationships with your customers at risk. Let’s look at some numbers:

  • As of 2018, 30% of rejected orders didn’t deal with fraud.
  • According to a 2018 “True Cost of Fraud Survey” by LexisNexis, false decline rates accounted for 18% – 28%, based on the size of the merchant and the type of products offered.
  • In 2018, according to Aite Group, $331 billion in CNP orders were falsely declined in the U.S. alone.
  • A 2017 survey shows that merchants declined 2.6% of all e-commerce orders because of suspected fraud. For orders accounting for over $100, the declined transaction rate because of fear of fraud was 3.1%.

What are you doing to fight fraud? Are you working with a trustworthy merchant services provider that can help you with this? If not, it’s high time you turned to a reputable payment processor like EMB, the top-rated high risk credit card processor and a respectable alternative online lender in the U.S., provides unique solutions for preventing false declines.

The cooperation with Verifi and Ethoca has enabled to provide exceptional services to combat fraud and mitigate chargebacks easily. The BBB lists EMB as an A+ company, and Card Payment Options as an A company. Besides, ValuePenguin considers EMB the “Best All-Around High Risk Merchant Account Provider.”

The Negative Impact of False Positives: How to Avoid It

False declines hurt e-commerce businesses in more than one way. When customers are notified about a declined transaction, they fall into frustration. So:

  • False declines can make your best customers choose your competitors
  • They can hurt your company’s reputation
  • They can make customers publicly criticize your company’s fraud detection capabilities

What about the causes behind false positives? Well, false declines are mainly caused by the fact that merchants rely too much on the basic fraud filters that often make part of e-commerce platforms or payment gateways.

Instead, it’s important to also rely on your expertise to accurately identify fraudulent transactions instead of being merely focused on these fraud filters for fraud detection.

You might be wondering how you can reduce false declines, aren’t you? The 1st step is to analyze your store’s declines to find out the cases of true fraud and those declined wrongfully. Next, search for methods that’ll allow you to double-check orders flagged for fraud before they’re declined.

It’s important to change your attitude towards fraud prevention to enjoy increased revenue, higher customer lifetime value, and a better customer experience.

To sum up, losing money to fraudsters is among the top challenges e-commerce merchants face.  So, it’s vitally important to be able to fight fraud effectively. For this, a collaborative approach between card issuers and you is immensely helpful. By sharing data, you both can better distinguish between fraudulent and legitimate cardholders.

Let us help you get a high risk merchant account today!

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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