False declines cost businesses billions globally as AI-driven scams force tighter fraud controls that accidentally block legitimate customers.
What’s happening: A spike in AI-driven scams is forcing businesses to tighten fraud controls, but global revenue losses from false declines now run into the billions each year as legitimate transactions get blocked alongside fraud.
Why this matters: With 61% of Australians hit by payment fraud and seasonal scam surges reaching 300%, businesses face an impossible choice between security and sales conversion, risking customer relationships and revenue in equal measure.
Australian businesses are caught in a dangerous balancing act. As fraudsters deploy increasingly sophisticated AI-powered scams, from hyper-personalised phishing to deepfake voice calls, companies are cranking up their security measures. But this defensive stance is creating an unexpected casualty: legitimate customers.
According to Checkout.com, global revenue losses from false declines run into the billions each year. This suggests businesses are overindexing, with legitimate transactions being blocked alongside fraud, and Australian businesses face the same risk.
The trust crisis
The Trust in Australia’s Digital Economy 2025 report finds that seasonal scam peaks, such as the 300% surge in ATO impersonation scams this tax season, are prompting tougher fraud checks that can inadvertently reject real customers and drain revenue.
Many of these attacks are powered by AI tools that are eroding trust in the digital economy and forcing businesses to balance security with sales conversion. The report reveals 61% of Australians have been hit by payment fraud in the past year, leading some customers to abandon purchases if a checkout experience feels slow, unfamiliar or insecure.
The data paints a concerning picture of consumer anxiety: 52% are concerned about AI-generated fraud, 63% see AI-powered shopping tools as the top privacy risk, and 56% feel under-informed about how to stay safe online.
Lost sales compound losses
“Every false decline is a lost sale and often a lost customer and over time those losses can seriously damage a business,” says Monique Biady, Head of Commercial AU at Checkout.com.
The report reveals 40% of people have abandoned a cart due to security concerns and 42% wouldn’t return after a failed payment. In Australia this is especially critical, as the problem is compounded by growing consumer mistrust.
“Businesses need real-time fraud prevention that stops scams without blocking legitimate shoppers, because you can’t grow revenue if you’re turning away the people who want to pay you,” she said.
Intelligence over brute force
While AI is powering more sophisticated scams, it is also the most effective tool for stopping them without hurting conversion. By combining machine learning, behavioural analytics and adaptive authentication, businesses can detect and block threats in real-time while keeping approval rates high, an approach used in Checkout.com’s Intelligent Acceptance technology.
The technology is critical in peak trading periods, when fraud attempts and false declines both spike. Seasonal scam surges occur not just at tax time, but also around major retail events, travel peaks and high-demand product launches.
Building competitive advantage
“Two-thirds of consumers say their trust in a business hinges on what happens at the checkout,” said Biady.
“Slow, clunky or overzealous fraud checks drive cart abandonment, often to competitors who can offer a faster, safer experience. Getting this balance right means reducing lost sales from false declines, protecting customers from fraud without adding friction, and building long-term loyalty in a market where trust drives repeat spend,” she said.
As fraud tactics evolve, a coordinated approach between businesses, regulators and tech providers is key to strengthening Australia’s digital economy.
While these figures highlight growing consumer anxiety, they also underscore the opportunity for businesses to differentiate on trust and turn payment performance into a competitive advantage.
The Trust in Australia’s Digital Economy 2025 report surveyed more than 18,000 consumers across 16 countries.
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