Fraud & Security Is EMV the New Y2K?

EMV chalkboard

Consumers fear credit card data theft more than terrorism. So why is EMV rollout not a big deal? As I re-read my blog from last week, along with everyone else’s in the payments industry, it struck me that the transition to chip-enabled EMV cards in the US was pretty much a non-event for anyone outside of the industry. Even within the industry, a couple of years ago, EMV was a rather ho-hum topic – this article from 2013 nails it: “Though many global merchants are equipped to handle smart cards, U.S. merchants have been slow to make the switch. The primary reasons for this hesitance are the high cost of replacing old technology and a lack of consumer demand for safer payments.” “A lack of consumer demand for safer payments.” Whoa! Certainly, that sentiment changed overnight a few months later, when the Target data breach made front-page news in December... [Read More]

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Risk & Compliance Can Alternative Data Expand Credit Access?

Alternative Data cover image

Widespread adoption of credit scoring by financial institutions over the past 25 years has made credit available and affordable to a majority of US consumers. But millions don’t currently have FICO® Scores because of sparse or old data in their credit files, or because they lack a credit file all together. This makes it difficult for them to establish credit, with many excluded from the mainstream financial system. This group frequently includes new immigrants, recent college graduates and those recovering from prior financial missteps. Can scoring help lenders safely and responsibly extend credit to these consumers? New FICO research says yes—but only when credit bureau data is augmented by the right alternative data. In fact, our research found that this approach makes it possible to generate predictive credit scores for more than 50% of previously unscorable credit applicants. Our study also showed that scores using alternative credit data help provide... [Read More]

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Collections & Recovery Video: Three Popular Misconceptions About Collections

David Lightfoot

When it comes to collections and analytics, there are a lot of funny ideas out there. See if any of these ring a bell: If I’m using a score to make decisions, it’s good enough on its own. If I apply more resources to a case, I’ll collect more. Analytics are too expensive, and I don’t get a return on my investment. Sound familiar? At FICO, we have heard these statements again and again from collectors. Watch my new video to hear me discuss the facts and myths behind these popular misconceptions about collections. FICO Spotlight: Collections & Recovery Myths from FICO™ Decisions  

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Risk & Compliance HELOC Resets: Cause for Concern?

HELOC Reset Research 1A

Worries about widespread home equity line of credit (HELOC) resets have been growing slowly but steadily in recent years. Over the next few years, HELOCs granted to millions of US homeowners prior to the Great Recession will reach their 10-year mark, which is when the bulk of HELOCs “reset” – that is, they become closed-end loans, and any remaining balance must be paid off in the following years. When these lines of credit convert from interest-only to principal + interest, consumers will likely see significant increases in their monthly payments. While some may refinance into another loan, there is concern that those who do not refinance may charge-off at increased rates. As a result, the banking industry faces a potential double-whammy of larger volumes of HELOCs hitting their reset dates, along with greater loss rates on those larger volumes. With that in mind, we undertook a research study to better... [Read More]

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Customer Engagement Federal Reserve Approves Same-Day ACH Service Improvements

Same Day 5

On Wednesday, September 23rd, the Federal Reserve approved enhancements to the same day automated-clearing house (ACH) service.  For those not familiar with same day ACH, it is a service that enables same-day payments and settlements between originating and receiving banks.  This is not a new concept and the functionality was originally introduced in 2010.  However, less than 1 percent of depository institutions currently use same day ACH functionality (Frierson/Secretary of the Board, Board of Governors of the Federal Reserve System, 2015). The new ruling aligns the previously voluntary FedACH same-day payment service with the industry’s (NACHA) action in May that required financial institutions to have same-day ACH and pay a 5.2 cents per-transaction fee to receiving institutions.   With the new ruling, phase 1 of the mandatory adoption of same day ACH will be required by September of 2016 This includes same day ACH credit transactions. This decision has been discussed... [Read More]

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Fraud & Security Video: Why Your Current Cyber Defense Isn’t Enough

Scott Zoldi interviewed on cybersecurity

Cyber criminals are consistently foiling defenses at top companies and public organizations, as well as smaller firms. Your own company has likely been breached. It’s clear that today’s cyber security solutions are no longer enough – but why? In this short video produced for the UK’s daily paper The Telegraph, I discuss a new approach to cybersecurity, and why we need it. This new approach is based on behavioral analytics that can provide you with real-time identification of existing and new, unknown anomalies. Furthermore, it prioritizes alerts with a threat score so you know which threats to go after first and better manage the false positives of today’s defenses. Today, your credit card is better protected than your organization. While credit card fraud is detected as it happens, a recent report by Verizon shows that 54 percent of data breaches are not discovered for months — although data is stolen... [Read More]

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Fraud & Security What Impact Will EMV Have on US Card Fraud?

Catd with chip

A sea-change in the US card market starts today. Are we ready? If you’re a card issuer and have issued all your cardholders with chip cards, you might think you’re ready. If you’re a merchant and have upgraded to chip reading equipment and software, you might think you’re ready. If you’re a cardholder with new chip cards in your wallet, you might think you’re ready. However, are we all ready, together? The liability change that takes effect today — aimed at curtailing counterfeit card fraud — has triggered a tremendous amount of process and technology change. But in truth, it’s just the start of the changes. Based on the UK and other countries here’s what we at FICO anticipate what will happen in the following months: Overall card fraud losses will drop Banks without chip cards will see their counterfeit losses increase Merchants without chip POS and ATM terminals will... [Read More]


Collections & Recovery Video: How Compliance Is Challenging Collections

Dave Lightfoot, VP, FICO

How do you balance the need to collect more with the changes in regulations? In this brief FICO Spotlight video, I discuss how rising consumer debt is creating challenges that FICO can help clients meet, with a portfolio of solution that integrates analytics, operations and communications. FICO Spotlight: Compliant Collections from FICO™ Decisions To learn more, visit the debt management section of our website.

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Fraud & Security What a Lightning Storm Tells Us About Fraud

Lightning Storm

Fraud is, relatively speaking, a rare event. Traditional reporting of fraud losses is often in “basis points” — tenths or hundredths of percentage points of total spend. And yet it is pervasive, expected and dangerous. So there is a need to maintain vigilance and be more holistic in one’s defence. I was reminded of this by, of all things, a spectacular display of forked lightning during our family vacation this past summer. As the storm grew closer and the lightning bolts more intense, I tried to capture a picture or two of nature’s incredible beauty and power. Now I don’t consider myself much of a photographer, but I do have a pretty decent camera with a whole range of automated features that have served me incredibly well in all sorts of picture conditions in the past. Nonetheless, I quickly came to realise that the automated settings were insufficient to pick... [Read More]

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Collections & Recovery Video: Compliant and Customer-Focused Collections

AJ Travagline, FICO

With the growth in regulation, there’s more pressure than ever on agents to handle debtor communications right. And sometimes, the best way to speak to an overdue consumer is not at all. In this brief FICO Spotlight video, AJ Travagline, senior director in collections management at FICO, says that automation and self-service channels are the answer to consistent and compliant communications. FICO Spotlight: Collections & Recovery from FICO™ Decisions To learn more, visit the collections compliance section of our website.

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