“In the late 1990s, the leading methods caught about 80 percent of fraudulent transactions.5 These rates improved to 90–95 percent in 2000 and to 98–99.9 percent today. An improvement from 85 percent to 90 percent accuracy means that mistakes fall by one-third. An improvement from 98 percent to 99.9 percent means mistakes fall by a factor of twenty. ”
-- Ajay Agrawal, Joshua Gans and Avi Goldfarb. “Prediction Machines: The Simple Economics of Artificial Intelligence.”
Credit card companies are making tons of money because they pay less for transactions and carry negligible fraud risk. I doubt though that the price of risk dropped by a factor of 20 because false positives don't cost much at all.
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