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Aug
19
7 Reasons Why Good Orders Can Look Like E-Commerce Fraud
Posted by Rafael Lourenco on 19 August 2019 10:00 AM

One of the greatest challenges you face as an online retailer isn’t losing money to fraudsters. It’s losing money when legitimate customer transactions are incorrectly flagged as fraudulent and declined.

In fact, according to Riskified, a whopping 35% ­- 80% of declined orders are legitimate. To clarify, these are transactions that may, on the surface, appear to be fraudulent, but are actually real orders placed by good customers.

These false declines, also called false positives, hurt online businesses in many ways. When a customer receives notice about a declined transaction, the customer becomes frustrated, embarrassed, and aggravated. In fact, a report by Javelin found that as many as 39% of online shoppers who are falsely declined choose to not return to that store again. Worse, these disgruntled customers often vent their anger to their social media network. An American Express study found that consumers tell an average of nine people about their good experiences—but they tell 16 people about the bad.

All told, U.S. merchants lose nearly $118 billion each year to falsely declined transactions—more than 13 times the cost of credit card fraud.

Clearly, false declines are a major problem for online merchants—more so even than e-commerce fraud. But, few online businesses are even aware of the problem, much less prepared and able to do something about it.


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