How to turn false positives into approved orders.
In the world of fraud prevention, it’s universally understood that declining fraudulent orders is the cornerstone of any effective solution. Afterall, approving fraudulent orders directly relates to the number of fraudulent chargebacks a company incurs. There is a very clear, tangible dollar amount of the impact fraud has on a business when it comes to approving fraudulent orders.
However, there is a lesser-known cost of fraud that often costs merchants substantially more than they realize: false positives. Unlike false negatives, which occur when fraudulent orders are approved, false positives occur when legitimate transactions from good customers are marked as fraud and incorrectly declined.
To combat an increase in fraudulent activity, merchants often overcorrect and end up declining more orders in an attempt to block fraudulent transactions. However, many of these declines end up turning away good customers. And if retailers are using a fraud solution that utilizes machine learning, these false positives are going back in and training models to continuously reject good orders it thinks are fraud. This further creates a false positive problem as you’re actually training fraud solutions to decline legitimate orders.
This is evidenced by some huge numbers as well. According to Aite, $331 billion worth of genuine transactions (both card-present and card-not-present) were falsely declined by US card issuers in 2018 alone. Yet, many retailers may not even be aware that false positives are happening right under their nose. A good customer may never re-attempt the order and the revenue from that transaction is lost forever. It’s also important to note that this one-time false positive isn’t just a one-time loss in revenue. Declining genuine customers can deter them from ever doing business with a company again. According to Bolt’s Ecommerce Fraud Report, 63% of shoppers are unlikely to make purchases from a retailer after experiencing difficulties completing their payment.
These false positives, or false declines as they’re commonly referred to, are a hidden cost of fraud, because oftentimes merchants aren’t aware they’re declining good orders in the first place. Plus, they’re slightly taboo to talk about. Many merchants are under the impression that if you’re using a fraud solution, good customers will always have their orders approved and fraudsters will always have their orders rejected.
Here at Bolt, we’re proud of the industry leading order approvals we deliver to our merchants. That being said, we will be the first to acknowledge that even with the strongest fraud solution in place, the occasional false positive will inevitably manage to slip through the cracks. When that happens, whether with Bolt or any other fraud solution, it’s important to have the right tools in place to catch them.
To combat this false positive problem, Bolt has launched a suite of fraud features dedicated to turning false positives into order approvals. These three fraud features—Rejected Order Insights, Order Re-Review, and Order Verification Emails—are available as part of Bolt Fraud Protection.
When an order is rejected, oftentimes merchants have no insight as to why. Many fraud scoring solutions provide a fraud score, such as “745” on a scale of 1 (least risky) to 1,000 (most risky), but no additional information. Merchants are forced to take these fraud scores at face value without understanding the data that impacted each individual score.
With Rejected Order Insights, Bolt allows merchants to make more informed decisions during manual reviews by understanding why an order was rejected. In addition to viewing the fraud score, the top 3 categories that impacted a transaction’s fraud score are also available. For example, instead of seeing “745” and no additional information, merchants will now see the reasons that impacted this score. Reasons can include: items in cart were subject to fraudulent activity, email was unrecognized or associated with fraudulent activity, user history is associated with fraudulent activity in the Bolt network, and many more. Bolt ensures that you’re given more than a numeric fraud score without any context before making important decisions.
Sometimes rejected orders come through that you want a second set of eyes on or already know that they should be approved. Whether it’s an order from a loyal customer who makes frequent purchases in person but is placing an order online for the first time or it’s a customer who called to let you know they entered a new shipping address because they moved, there will be instances when genuine shoppers have an order initially declined.
With Order Re-Review, retailers can now easily request an additional review from Bolt’s dedicated risk team. This allows you to reduce customer complaints associated with false declines by requesting a second review of declined transactions directly within Bolt’s dashboard. You can also provide additional context and attach relevant documents (such as past order history) to send to Bolt’s fraud team. This enables you to ensure due diligence is performed on risky orders and helps you convert rejected transactions into approved orders.
Lastly, our first two features covered actions that merchants can take, but what about your shoppers? When a customer experiences a false decline, they typically aren’t notified about the status of their order until it’s too late. This not only eats into your revenue, but leaves your shoppers with a terrible customer experience.
Bolt’s Order Verification Emails improve customer visibility into order statuses and notify shoppers before their orders are permanently rejected. Shoppers are sent an email explaining that their orders have temporarily been put on hold. These notifications are sent immediately after a failed fraud review and prompt your customers to reach out to your support team to verify their orders. This allows you to not only reverse initial order rejections to increase order approvals, but significantly improves the customer experience since even one false decline can turn away a customer for good.