False Positive (FP): A legitimate transaction is incorrectly flagged as fraudulent. This causes inconvenience to genuine customers whose valid transactions are blocked unnecessarily.
False Negative (FN): A fraudulent transaction is incorrectly classified as legitimate. This is more dangerous as actual fraud goes undetected, causing financial loss.
The examiner expects you to clearly define both terms in context (fraud detection), not in general. Always mention the real-world consequence — for fraud detection, FN is costlier because actual fraud is missed. This shows conceptual understanding, which CBSE rewards. Remember: FP = wrongly accused legitimate; FN = missed actual fraud.