Fraud alert on laptop Source: Shutterstock

As the nature of card fraud continues to evolve, issuers and credit unions are forced to walk an increasingly precarious tightrope between guarding against consumer fraud losses and causing cardholder friction. Of course, fraud mitigation is critically important to both credit unions and their members, but equally undesirable is having legitimate purchases declined not due to insufficient funds or an incorrect PIN being entered, but because risk rules in place have erroneously identified fraudulent activity. This is known as a false decline or false positive.

Data breaches lurk as an ever-present threat in the background so it is understandable that a “better safe than sorry” approach has been taken, but the only sure-fire way to prevent 100% of fraud would be to approve no transactions, which is clearly no solution at all. However, even the “better safe than sorry” strategy has serious drawbacks – particularly the lost revenue and negative impact on the member experience.

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