# How to Identify False Declines in e-Commerce > False declines cost retailers $118B a year, far more than card fraud. Learn 4 ways to identify false declines in ecommerce and stop losing good orders. TL;DR False declines happen when a merchant wrongly rejects a legitimate order, and they cost retailers far more than actual fraud, with an estimated $118 billion lost yearly versus $9 billion to credit card fraud. Merchants can identify false declines by monitoring online mentions, analyzing the context of orders, reviewing questionable orders manually, and accurately calculating order approval rates. Knowing the true approval rate is essential, since automated systems often hide a false decline problem that quietly drains revenue. It’s relatively easy for merchants to know when they have a fraud problem. Their [chargeback ratios](https://blog.clear.sale/high-risk-industries-for-payment-processing-and-credit-card-fraud) soar, and customer complaints rise. But knowing how many legitimate transactions a merchant has *incorrectly declined*? That’s a much harder metric to quantify, but it’s no less important. Here’s where to start. Businesses that can’t correctly identify false declines and prevent their recurrence can suffer devastating effects. For example, the more valid orders a merchant declines, the more orders, customers and revenue they’re losing. Think that’s an exaggeration? Consider this: Retailers [lose more money on false declines](http://www.bankingtech.com/439631/mastercard-targets-rising-number-of-false-declines/) ($118 billion) per year than the amount lost to actual **credit card fraud** ($9 billion). Luckily for merchants, identifying and preventing these false declines doesn’t have to be hard. Here are four ways to identify false declines in e-Commerce. ## Monitor Online Mentions Because an estimated[60% of declined orders](https://cardnotpresent.com/false-declines-biggest-threat-to-merchants-during-holidays-report/) are actually legitimate orders, **false declines** don’t create just unhappy customers — they create unhappy *vocal* customers. Through a handful of [complaints on social media](https://blog.clear.sale/false-declines-hurting-your-online-reputation), disgruntled consumers can ruin a merchant’s reputation forever. These customers are posting on social media to try to find out why their transaction was declined — hoping to get answers from the company itself or at least vying for sympathy from other similarly rejected customers. To minimize the damage online posts and reviews can do, e-commerce merchants should keep a close eye on complaints sent to customer service and posted on review sites like Yelp, customer forums and social media sites. If a merchant sees their name appear repeatedly alongside complaints, the merchant will want to review their fraud-screening procedures, re-examine any fraud filters that may be rejecting good transactions, and identify any common characteristics of the declined transactions. ## Analyze the Situation One of the worst things business owners can do is decline transactions based on assumptions. Making sweeping generalizations about purchases — like orders placed from China or orders with shipping addresses that differ from billing addresses — can lead to plenty of false declines. [Understanding the context](https://blog.clear.sale/post/3-Reasons-to-Reduce-Your-False-Decline-Rate) of an order, like knowing orders placed as gifts during the holiday season will frequently have different billing and shipping addresses, can help merchants identify and approve orders that might otherwise be declined. ## Review Orders Manually When it comes to correctly evaluating questionable and high-risk orders, manual reviews are essential. These reviews let e-commerce merchants flag truly fraudulent orders, approve more legitimate purchases, get better insights on distinguishing between the two, and improve the accuracy of future reviews. The process sounds simple enough, but the trouble lies in that nearly [30 percent of online orders](http://www.experian.com/blogs/insights/2016/05/reduce-false-declines/) would likely be subject to review. That means manual reviews can be a time-consuming, labor-intensive expense, making it less practical for merchants with high order volumes or small businesses with limited staff. And for merchants without in-house fraud expertise, these reviews might not even be an option. ## Calculate Order Approval Rates Decline rate is a critical metric for merchants to routinely calculate. But there’s a catch: Even if merchants *think*they know their approval rates, they’re probably wrong, thanks to incorrect calculations. And that can be a costly mistake for several reasons. If merchants don’t know their true approval rates, they’re likely underestimating the revenue they’re losing. Even worse, if they’re using purely [automated fraud systems](https://blog.clear.sale/why-automatic-declines-are-dangerous-for-online-merchants) to screen transactions, it’s almost guaranteed that they have — and are *unaware*they have — a false decline problem with sales. So these merchants blindly go about their business, leaving money on the table with every declined transaction. Because it’s so important for merchants to know *which* transactions failed and *why*, we’ve published a whole e-book dedicated to calculating and understanding order approval rates. Download the “[How to Safely Approve More Orders Without Increasing Chargebacks](https://offer.clear.sale/improve-order-approval-rates)“ e-book today, and learn how to stop leaving money on the table. You’ll learn the needed steps to get an accurate view of your order approval and false decline rates and how your team can improve order approvals without a corresponding increase in false declines. **We’ll also explain how our approach never incorrectly declines transactions — letting you safely approve more orders without increasing your chargeback rate.** ## Frequently Asked Questions ### What is a false decline in e-commerce? A false decline happens when a legitimate transaction is incorrectly declined because it looks fraudulent. An estimated 60% of declined orders are actually legitimate, so false declines cost merchants real revenue and customers. ### How much do false declines cost retailers? Retailers lose more money on false declines, an estimated $118 billion per year, than the roughly $9 billion lost to actual credit card fraud. This makes false declines a larger revenue threat than fraud itself for many merchants. ### How can merchants identify false declines? Four ways help: monitor online mentions and complaints on social media and review sites, analyze the context of each order instead of relying on assumptions, review questionable orders manually, and accurately calculate order approval rates. ### Why is judging orders on assumptions a problem? Declining orders based on sweeping generalizations, like rejecting all orders from a certain country or with mismatched billing and shipping addresses, leads to false declines. Understanding context, such as gift orders during the holidays often shipping elsewhere, helps approve good orders. ### What is the downside of manual reviews for false declines? Manual reviews help flag truly fraudulent orders and approve legitimate ones, but nearly 30% of online orders would likely qualify for review. That makes manual review time-consuming and labor-intensive, which is hard for high-volume merchants or small teams without fraud expertise. ### Why is calculating the true approval rate important? Many merchants miscalculate their approval rate and underestimate the revenue they lose. Those using purely automated fraud systems almost certainly have a false decline problem they cannot see, leaving money on the table with every wrongly declined transaction. --- Source: [https://www.clear.sale/blog/how-to-identify-false-declines-in-e-commerce](https://www.clear.sale/blog/how-to-identify-false-declines-in-e-commerce)