News, Education and Events Decoding Digital Payments & Fraud

News, Education and Events Decoding Digital Payments & Fraud

False CNP Declines Dog Issuers Too

False CNP Declines Dog Issuers Too

The continued rise in online transactions globally along with fraudsters becoming increasingly sophisticated resulted in financial institutions losing $40 billion to card fraud in 2015, a 29 percent increase from the year before, according to a new report. Of that total, London-based data analysis firm Oakhall and antifraud technology provider Featurespace attributed 45 percent ($18 billion) to losses associated with false declines. While false declines are especially problematic for e-commerce merchants, issuing banks also are affected by this increasingly pernicious effect of efforts to curtail legitimate card-not-present fraud. According to historical data examined by Featurespace, the fraud systems being used by banks are preventing 10 legitimate transactions for every actual fraudulent purchase. When card-not-present transactions alone are considered, the number of declines to legitimate customers rises to more than 20 for every one fraudster stopped. Of the $18 billion lost globally by banks to false declines, Featurespace estimates a third goes to competitors in lost market share when a declined customer simply pulls out another card. The other $12 billion is accounted for by additional costs associated with customer service calls and resolving customer complaints.