Are You Positive?

Posted June 1, 2015

Creditcards.com Study Shows 39 Percent of Fraud Alerts Are False Positives Triggered by Legitimate Transactions

Patient: Are the test results back?

Dr: They’re negative.

Patient: Oh my God.

Dr: No. Negative is positive.

Patient: Are you positive?

Dr: About positive being negative? I’m positive.

Patient: So I should be negative?

Dr: No, you should be positive.

Patient: About being negative?

Dr: Yes. Positive

Patient: About your bill. My cash flow is negative.

Dr: So you can’t pay?

Patient: I’m positive.

Okay, this bit of banter, inspired by Abbott & Costello, was not exactly a brand-spanking new thought. But in the worlds of medicine and credit card transactions, positive is negative and vice versa. Or maybe in the case of credit card transaction that could be Visa versa.

In his piece on paymentweek.com, Kevin Xu reports on a new study from CreditCards.com that found that more than half of customers who received fraud alerts had false positives. The following has been excerpted from his piece and edited to fit our format. You may find the complete article by clicking on this link.

1000 adults polled

[Of those polled] 38 percent had received fraud alerts at least once. Of [the] group of consumers who had received fraud alerts, 39 percent said that all the alerts were in error while 14 percent had mostly legitimate transactions that triggered fraud alerts.

1 in 5

Only one in five blocked transactions were actual cases of fraud. [What] a financial institution chooses to do after flagging a transaction can have a drastic impact on the payment experience of the consumer.

Risk factors and friction

The issuing bank usually validates the transaction based on risk scores that factors in location, purchase history, along with a host of other elements. The financial institution can either block the transaction, causing major friction for the consumer if [the] purchase is legitimate, or the FI can choose to flag the purchase after it goes through to follow up with an investigation.

Validation

Thanks to the prevalence of smartphones, financial institutions can validate a purchase through text, email, and the trusty customer service representative to reach their cardholders directly after purchase. By embracing a proactive approach, financial institutions can both better secure customers while lowering the friction of having to decline transactions at the point-of-sale.

ThreatMetrix

ThreatMetrix

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