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Written by Cyndie Martini
on September 13, 2016

Consumer security is a top priority for financial institutions across America. At a time when emerging technologies allow consumers to make purchases in any number of ways, having confidence that transactions are being made securely without any information being shared is important.

Credit and debit card fraud are increasing, with 90 percent of all fraud-identity cases in the U.S. involving cards, according to Payments Leader. As such, it's crucial that credit unions, banks and other card issuers are able to identify and stop fraudulent purchases.

A new concern emerges

At the same time, the need to quickly recognize fraud when it occurs has made way for a new problem altogether: false positives.

According to SecuredTouch, every year, 33 million adults, or 15 percent of cardholders, are unable to complete a purchase because the card issuer wrongly believes it is a fraudulent transaction.

This can be frustrating for the consumer; first because of the hassle involved in clearing up the issue and finally being able to make the purchase. Perhaps more detrimentally, it shows the cardholder that the card issuer may not always know the difference between a fraudulent and credible purchase.

According to a survey from, 28 percent of consumers aren't bothered when legitimate purchases are blocked and 22 percent are relieved. However, one-quarter said they felt annoyed in this situation, and others felt anxious, angry or embarrassed.

Reducing false positives

There are two things credit unions and other card issuers must do to maintain healthy customer satisfaction. First, fraud detection systems should continue to be improved upon. However,  Christopher Viale, president of the Cambridge Credit Counseling Corp. in Massachusetts, explained to that there may always be some errors in these programs.

"Perfecting fraud detection algorithms is probably an unattainable goal," he said. "After all, a consumer's behavior will never be entirely predictable, but many of today's programs are quite good already, and they're only going to get better. The tipping point may come when consumers lose their patience with the process and abandon transactions in significant numbers. That would put merchants at risk."

Improving communication

As such, card issuers should address the issue from another perspective as well. Since false positives may never go away completely, finding the right way to communicate them to consumers is crucial.

Payments Leader pointed out that the typical way to address fraud detection is through a phone call directly to the consumer. When the consumer confirms the purchase, it is able to go through.

However, many consumers may ignore the phone call upon seeing an unfamiliar number. Then, they will have to return the call or go through other steps to get the issue resolved.

A potentially more efficient method is through SMS notifications. When the fraud detection software is triggered, a message is sent to the consumer. He or she can respond right away to either confirm or deny a purchase.

Push-messaging through the credit union's app could also be a quick and efficient way to resolve false positives quickly and in a manner that consumers understand and appreciate.


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