The SEOmoz blog has an article on the possible side-effects of using a CAPTCHA on your website:

…with CAPTCHA on, there was an 88% reduction in SPAM but there were 159 failed conversions.  Those failed conversions could be SPAM, but they could also be people who couldn’t figure out the CAPTCHA and finally just gave up.  With CAPTCHA’s on, SPAM and failed conversions accounted for 7.3% of all the conversions for the 3 month period.  With CAPTCHA’s off, SPAM conversions accounted for 4.1% of all the conversions for the 3 month period.  That possibly means when CAPTCHA’s are on, the company could lose out on 3.2% of all their conversions!

Killing-off 3.2% of conversions is certainly best avoided, but in my opinion the figure is misleading.

We use a CAPTCHA on all of our website forms (here for example), and I can testify that they work, at least in terms of reducing the volume of spam we receive.

Do users like them? Probably not. I know I dislike having to use them, but consider them to be a necessary part of doing business online.

In the UK we need a PIN number every time we use a debit or credit card in a store. It’s a nuisance to have to remember them all, but if I want to use my cards, I don’t have a choice.

When I fly internationally, I need to check in two hours before the flight departs. Queueing for the security checks is a nuisance and unpleasant, but if I want to fly safely, and can’t afford my own jet, that’s what has to be done.

Some people may choose to no longer use their cards in stores or fly internationally, but not a significant number. And until the stores and airlines find a better way to protect their customers and passengers, this isn’t going to change.

If a potential customer is put-off using our services by having to enter six easy to read characters, I don’t believe they were ever serious about working with our company.

CAPTCHAs’ Effect on Conversion Rates