Everyone knows the holiday season is ripe for card fraud. A survey of Certified Fraud Examiners found that fraud increases 20% during the holidays, accounting for 2.5% of all sales. We talked a few weeks ago about how issuers and merchants are attempting to tackle online fraud, but we’re seeing even more aggressive tactics this holiday season - and the impact on consumer spend is severe.
Consumers are already highly sensitive to false positive card declines. In a 2013 survey by Finsphere, twenty-seven percent of cardholders said they had experienced a false decline. Nearly double that number (47%) of consumers are concerned with false declines. The survey of 1,200 adults found 82% of cardholders who experienced a false decline felt the episode was inconvenient, embarrassing or irritating.
But the true cost here is loyalty. Javelin Strategy and Research found in a recent survey that nearly 4 in 10 (39%) of customers abandoned their cards after being falsely declined.
“Issuers must invest in high-quality authorization solutions and strategies to improve card authorization practices. Failing to live up to cardholder standards may encourage customers to, at best, decrease their card usage or, at worst, to stop their use of the card entirely,” said Al Pascual, Director of Fraud & Security, at JAVELIN. “Cardholders expect authorization perfection from their issuers and will not stand for fraud or false positives.”
Which is why we were caught by surprise when we recently stumbled upon this recent bank fraud alert:
Fraud Alert
Several banks in the state of [redacted] are seeing significant debit card fraud. In order to protect our customers, we have blocked several states that have resulted in the most fraud thus far:
Arizona
Alabama
Arkansas
California
Colorado
Connecticut
Florida
Georgia
Idaho
Illinois
Kansas
Kentucky
Louisiana
Massachusetts
Michigan
New Jersey
New Mexico
North Carolina
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
Tennessee
Texas
Utah
Virginia
Washington
More states may be added if we deem them at risk for fraud. If you are planning on traveling in the near future please call us so we can temporarily unblock any states that coincide with your travel plans.
If you would like to purchase a product from one of these states online, or are paying a bill to a company located in these states your card will decline. Please call us to unblock these companies.
We apologize for any inconvenience this may cause.
Mitigating fraud and maintaining customer convenience shouldn’t have to be treated as mutually exclusive priorities. When consumers aren’t spending, everyone suffers. The solution doesn’t have to be deciding between two poor options:
- Widely blanketed, ineffective decline rules that interrupt your cardholders’ spending habits.
- Or not using any fraud rules at all, letting fraudulent spend skyrocket.
Financial institutions with the ability to detect the true point(s) of compromise can isolate compromise cards faster, write rules more intelligently, and most importantly - keep their cardholders happy and spending.
To learn more about how Rippleshot Sonar can help financial institutions better mitigate credit and debit card fraud, check out our product sheet below:
