Should My Fraud Management Solution Screen Every Online Transaction?

If your fraud system doesn’t see the big picture, it will struggle to tell the
difference between good orders and fraud ... potentially putting your business at risk.

Preventing payment fraud requires
finding the right balance

Just like ecommerce itself has evolved, so has your business. 

And like many companies, you may have reached a crossroads with your fraud prevention practices. Even with the solid solutions that have gotten you this far, you might be struggling to keep up. 

As you examine your ecommerce payment processing strategy, you might be wondering: Should you only screen transactions that appear to be fraudulent, or should you screen every transaction that passes through your ecommerce portal?



Cyber criminals are strategic — and relentless. They're always testing your fraud prevention defenses. But a heavy-handed fraud approach could turn away legitimate customers.

Many companies rely on artificial intelligence (AI) for their fraud management. These tools can be beneficial. But they're not foolproof.

Relying solely on AI to “cherry pick” the transactions to be reviewed is a risky business move. You need a solution that can stop the fraud AND approve more good orders.

Let’s look at the pros and cons when you only screen some, but not all, transactions with your fraud program.

The Risks of Selectively
Screening Transactions

1Screening only a few transactions misses the big picture.

AI-based strategies are not always able to detect emerging fraud patterns

For example, the purchase of one PC delivered to Cherry Street seems legitimate. But if you’re not screening every transaction, you won't see that 10 PCs were delivered to 10 different addresses on Cherry Street on the same day – which probably indicates fraud.

To identify bigger fraud patterns, and increase its accuracy, AI-based fraud systems need to receive all relevant data.

The Advantages of
Screening Every Transaction

1Screening more transactions helps you see the complete picture.

The more transactions you screen, the more data your solution can use to detect fraud patterns, allowing it to fine-tune and broaden its intelligence so more accurate decisions can be made across the board.

Consider our example with the PCs shipped to Cherry Street. Each individual sale may look innocent, but the true fraud pattern emerges when the transactions are viewed together in a broader context.

2Legitimate orders can get caught in fraud filters.

Sometimes perfectly good orders can have indicators of fraud, such as when a customer purchases a last-minute gift for rush delivery to an address other than the cardholder’s address.

If you aren’t screening every order, these “gray-area” transactions will be declined. You'll lose the sale and potentially the customer relationship, too: A full 40% of consumers would likely boycott your business over a false decline.  

Don't let a low fraud rate lull you into a false sense of security around selective screening — it may actually reflect a high turndown rate that can negatively affect your revenue and reputation.

2Screening questionable transactions helps you approve every legitimate order.

Many transactions fall into a “gray area,” where it’s hard to tell if they’re fraudulent or not. Fraud management systems that rely solely on AI will typically automatically decline these transactions.

When you have a fraud management system that can research and analyze these questionable transactions, you’ll find many of these “gray-area” sales are legitimate and should be approved.

By screening every transaction, you avoid false positives. Your approval accuracy skyrockets, allowing you to maximize your revenue and retain more customers. 

3 Fraud filters are often set up incorrectly.

Online businesses often set up multiple rules in their fraud filter to try to flag as many fraudulent transactions as possible.

But counterintuitively, this can increase risk exposure. If the fraud filter rules are applied in the incorrect order, some rules may cancel out other rules – and this can leave you less protected than before.

3 A more comprehensive approach to fraud management delivers better protection.

A multilayered fraud management system still uses fraud rules to identify questionable transactions — but it doesn’t stop there.

Instead, a more comprehensive solution will be capable of screening every transaction to ensure you can accurately identify every instance of fraud and accurately approve every good order.

4 Fraudsters will play the system.

Fraudsters are sophisticated, and they know how to fly under your radar. For example, they’ll often test your fraud system by making low-value purchases just to see if a stolen credit card number works. If your system approves that small fraudulent order, you’ve just opened the door to a bigger fraud attack.

Professional fraudsters often work together to coordinate large-scale attacks on a company in a very short time.

And rest assured, if one trick doesn’t work, they’ll try a new trick to figure out how to get past your filters. Fraudsters can evolve their tactics extremely quickly, and AI rules have a hard time keeping up with such rapid changes.

4 You can prevent large-scale attacks because you’re watching for them.

Screening every transaction enables you to spot fraudsters testing your waters with small transactions they’re hoping you’ll ignore. Screening every transaction also positions you to spot whatever new trick the fraudsters try next.

This approach is like building a watchtower around your ecommerce payment processing: With greater visibility, fraud attacks can be quickly identified, stopped and prevented.

Once fraudsters recognize that you’re watching for them, they’ll pack up and move on to another business that isn’t as prepared.

Your Ecommerce Transaction Screening Needs Intelligence

When your fraud system only screens for risky transactions and does not incorporate a more comprehensive approach, it's operating with blinders on.

Without seeing the complete fraud picture, your solution is bound to inadvertently decline legitimate orders  ... and you will struggle to prevent large-scale attacks.



When you screen every transaction, you can see the complete picture across all incoming orders, so you can approve more orders while also stopping fraudsters in their tracks – which means you’ll be able to protect your merchandise, your reputation, and your hard-earned profits.

Every minute, cyber criminals are trying new tactics to get past your fraud filters.

With increased transaction volume comes increased fraud attempts. And as your company grows, the volume and sophistication of these attacks will increase. 

Screening all transactions will help you see the bigger picture ... but there are still pieces missing. 

What are the fraud indicators and trends in your industry? In your region? In a potential new market your business is eyeing? 

It helps to have the full data picture across your own transactions. Now, imagine a global view of transactions gathered from industry-leading AI and a team of over 1,500+ fraud analysts serving over 5,000 clients.

That’s why ClearSale is trusted worldwide, helping ecommerce businesses fight fraud more easily and more accurately, so they can maximize their growth.



How Ecommerce Fraduud Protection Works With ClearSale

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