All posts by TJ Horan

Fraud & Security Double-Digit ATM Compromise Growth Continues in US

ATM with Hacked stamp
Aug312017

While data breaches and ransomware grab the headlines, we’re still seeing fraud growth due to ATM compromises in the US. The fraud growth rate has slowed down from the gangbusters surge we saw in 2015, but consumers and issuers still need to pay attention. The latest data from the FICO® Card Alert Service, which monitors hundreds of thousands of ATMs and other readers in the US, shows a 39 percent increase in the number of cards compromised at US ATMs and merchants in the first six months of 2017, compared to the same period in 2016. The number of POS device and ATM compromises rose 21 percent in the same period. Beyond the numbers, at FICO we have seen the rate of fraud pattern changes accelerating over the last two years. As criminals try to beat the system, we are continually adapting the predictive analytics we use to detect compromises.... [Read More]

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Fraud & Security Application Fraud, Analytics – and Gamecocks?

May112017

I was looking over my blog archives the other day and read this chestnut from December 2015: “With the introduction of EMV in the US, both [card not present and application fraud] are up – especially the sophistication of the synthetic identities used in application fraud.” Well, isn’t that the truth. Fast-forward a year, to the fourth quarter of 2016, when financial losses stemming from application fraud, which includes the creation of synthetic identities, grew by 42%. Online lenders are being hard-hit; fraudsters are applying for multiple loans within minutes, with no intentions of repaying them. Customer expectations create fraud opportunities Here’s what’s happening: Consumers expect instant gratification and there are many, many companies willing to indulge them: Uber, Amazon, Seamless, ad infinitum. Those expectations have transferred directly to lending; customers expect ever-faster loan approvals, and online lenders are happy to oblige. Loans that used to take three days to... [Read More]

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Fraud & Security Hacked ATMs Lead to 70% Rise in Debit Card Fraud

ATM with Hacked stamp
Mar292017

The latest fraud news from the FICO® Card Alert Service, which monitors hundreds of thousands of ATMs and other readers in the US, is bad. In fact, it’s doubly bad: The number of payment cards compromised at U.S. ATMs and merchants monitored rose 70 percent  in 2016. The number of hacked card readers at U.S. ATMs, restaurants and merchants rose 30 percent in 2016. This new data follows a 546 percent increase in compromised ATMs from 2014 to 2015. Here’s some more details: About 60% of the compromises were at non-bank ATMs, such as those in convenience stores. The rest took place at bank ATMs or point-of-sale (POS) devices, such as card payment machines at retailers. The average duration of a compromise continued to fall — on average, an ATM or POS device would be compromised for 11 days, compared to 14 days in 2015. The 2016 average duration is... [Read More]

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Fraud & Security Same-Day ACH Requires AI-Powered Fraud Protection

Mar272017

On Groundhog Day 2017, I was thinking that the payments industry is a lot like Groundhog Day, the movie. There are an awful lot of repeating themes in the payments world. And in the best case, they can teach us invaluable lessons. Payments speed is one of those recurring themes. Four years ago, we at FICO started saying it’s time for banks to upgrade fraud protection in their retail banking departments. Otherwise, financial institutions could wake up one day—Groundhog Day?—and realize that it’s too late; fraudsters will have figured out how to hijack funds flowing out of checking accounts. Today could be that day. Are banks truly ready for same-day ACH? Between the Same Day ACH initiative launch on September 23, 2016 and December 31, 2016, there were more than 13 million same-day ACH transactions. A significant 14% were person-to-person (P2P), a pretty astonishing amount for a brand-new payment type.... [Read More]

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Fraud & Security AI Meets AML: How Smart Analytics Fight Money Laundering

Brain with AML highlihgted in neural pathways
Feb132017

In the last six months alone, I think I’ve read at least 1,000 Wall Street Journal articles on artificial intelligence (AI) and its technologic cousins: robots, drones and self-driving cars. Between those three things, I’m pretty sure most of the jobs humans have today will change. Some will even disappear. There is so much noise about AI and its ilk that, in my opinion, it’s important for us in the worlds of fraud and compliance to take a step back and focus on how we can implement this incredibly advanced technology in the context of our current technology and regulatory environment. For example, while it’s pretty cool how AI is now being leveraged to play poker and beat professionals in real games, it’s a distraction from the discussion of ways that AI can help right now, today, for real business challenges. One of the places where AI can make a... [Read More]

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Fraud & Security Report from Frankfurt: Compliance as Competitive Advantage

Dec152016

Yes, it’s true. When it comes to anti-money laundering (AML) and financial crime, the right strategy, people resources and technology can transform the compliance function into a competitive advantage. That was a big theme at the 13th annual FICO TONBELLER user group meeting I recently spoke at in Frankfurt, Germany. It was my second TONBELLER user group, and I was excited to return. This year, as in 2015, I was intrigued to meet compliance professionals from around the globe, talking about the challenges in their markets. The downstream impact of financial crime One of the folks I met is Stefan Segerer of Finanz Informatik, a German company that provides IT solutions to savings banks in Germany. In this FICO video Stefan talks about how Finanz Informatik uses FICO TONBELLER solutions to protect more than 430 banks from financial crimes. Stefan sums up the impact nicely: “Money laundering costs the financial... [Read More]

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