Getting rejected never feels good – it leaves a mark. But for top companies across the digital space, overtooled fraud systems are doing just that, rejecting otherwise good customers in droves. And this could be the biggest problem we face with digital transformation. As digital first impressions are made at volumes impossible to comprehend, those critical interactions too often fall flat, leaving relationships marred, even severed.
In fact, a recent study published by the Merchant Risk Council reported that 33% of customers that are falsely declined, will never return to that site. The report continues:
…the average online store declines 2.6% of all orders because they suspect fraud. The higher the purchase price, the higher the percentage of declines. Merchants decline roughly 3.1% of orders over $100, for example.
You don’t need to be a mathematician to understand the magnitude of this systemic issue. The opportunity cost can’t be overstated.
Despite over a decade working with fraud teams, helping hundreds of companies fight fraud and reduce losses caused by cybercriminals, data breaches, and poor verification strategies – what has been alarming to me is just how much businesses lose each year to false positives – the decline of good customers that, for some reason, are flagged as suspicious and declined.
I have seen the false positive issues first-hand and knew it was more significant than most organizations realized. Then, I came across an Aite' report that validated my experience with real numbers.
Aite’s report, The E-Commerce Conundrum: Balancing False Declines and Fraud Prevention, reveals 62 percent of surveyed merchants reported their false decline rates have increased over the past two years. The Aite report also predicts losses due to false declines will grow to $443 billion by 2021—dwarfing the losses from fraud itself. Currently, most merchants experience false decline rates of between 1.1 percent and 5 percent.
All these numbers are staggering and highlight the weight and critical importance of how a first impression is handled in a digital setting. I can’t help but think that if these organizations had better intelligence on genuine vs fraudulent customers, that number would be a fraction of what it is.
I am still optimistic, however, that we can make that first impression the right one. By understanding the intentions of each visitor, we can unlock the ability to confidently reduce the false positive rate for any organization. Through monitoring and translating the real-time digital body language of a digital interaction, Neuro-ID reveals the intent and experience of every prospect and customers providing deep insight into which are genuine and want to buy, and which ones are trying to cyber-shoplift. That distinction alone has the potential to save billions of dollars annually.
Let me show you how you can reduce your false positive rate and increase conversion by seeing and understanding your real, good customers – the ones that clearly deserve a best first impression.
Reach out anytime. We'd love to help.