All posts by TJ Horan

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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Fraud & Security 4 Payments Predictions for 2017 – Mobile, Fintechs and EMV (Still)

Psychic office
Dec142016

It’s predictions time again. And while I was correct that 2016 did turn out to be the year of bad analytics—see the ultimate illustration below—this year I’m doing something different: I’m predicting what won’t happen in the coming 12 months. The past year perhaps held no analytic surprise greater than the 2016 US Presidential election. Source: New York Times Let us move on to 2017. 1. Prediction: There will be no clear winner in the mobile payments wars A plethora of payment apps emerged in 2016, further upping the already densely populated payments landscape. Launches included Wal-Mart Pay, CVS Pay, Kohl’s Pay and CakePay (my personal favorite), to name just a very few. These apps are follow-ons to Apple Pay, and while many of them aren’t quite as good, that hasn’t stopped the stream of new entrants. Despite consumer confusion and high levels of market fragmentation, the payments landscape is going... [Read More]

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Fraud & Security Four Tips to Protect Your Phone From Hackers

Hacker message with ban symbol
Nov082016

Wash your hands. Brush (and floss) your teeth. Don’t reply to emails from Nigerian princes asking you to accept a wire transfer. These are just a few of the lessons we learn as kids, and adults, to develop good hygiene: “conditions or practices conducive to maintaining health and preventing disease, especially through cleanliness.” When I read about people infecting their Android phones with Gugi––a Trojan malware that steals user credentials when consumers log into mobile banking apps––by clicking on a link in a random text message, it’s clear to me that mobile phone users are in need of some security hygiene lessons. Here are four ways to keep your mobile phone safe from malware and hackers: 1.   The most basic: Don’t click on clickbait links in marketing text messages from senders you don’t know––even if the message promises you something really great, like a free cruise, an 80-quid coupon or a... [Read More]

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Fraud & Security Securing Digital Payments with Less Friction and Fraud

Aug302016

At the grocery store the other day, I paid using ApplePay. With just a tap of my iPhone and a chipper (payments humor!) musical chime, my payment was accepted. A few seconds later, after touching a few buttons on the payment terminal screen, I was walking out the door. What just happened? I experienced two things: a frictionless digital payment, and a mild customer experience victory.* Bringing down, or rescuing, the house Best of all, I wasn’t dealing with the “swipe or dip” decision point, and I certainly wasn’t putting myself at risk for knocking out the store’s POS devices. (Check out the blog in the tweet below for another payment expert’s hilarious, deeply personal tangle with EMV.) Based on my newfound confidence from the grocery store, I then marched into the local CVS pharmacy, brandishing my iPhone near the POS terminal only to hear the cashier say, “Oh, are... [Read More]

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Fraud & Security UK Card Fraud Jump Is Largest in Europe

European Fraud Map 2015
Aug042016

Today we released our interactive European Fraud Map for 2015, showing card fraud trends for 19 European countries. The big news was the 18 percent rise in UK card fraud, largely driven by online transactions. The rise in UK card fraud equates to an additional £88.5 million lost. Some 75 percent (£66.7 million) of that increase was in card not present (CNP) fraud, and £42.4 million of CNP fraud came from e-commerce. The UK contributed about 43 percent of the total card fraud losses across the 19 European countries studied. Why was the UK’s rise so steep? My colleague Martin Warwick, who provided the commentary in the map, surmises that cyber crime and the theft of personal data was one culprit. But card issuers’ desire to make online shopping easy may also be playing a part. “We cardholders are very demanding, and if we don’t get what we want then... [Read More]

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Fraud & Security Mobile Payments: CakePay Is Eating the World

Cheesecake photo
Jul222016

As a payments professional with a sweet tooth, the name is as good as it gets: CakePay, the mobile payment app rolled out by The Cheesecake Factory a few months ago. CakePay is more yummy-sounding than the virtuous ApplePay, but not quite as good as CookiePay, which I’m sure is in development somewhere. Ignoring the risks of myocardial infarction from a slice of Toasted Marshmallow S’mores Galore cheesecake, I decided to take CakePay for a spin. And it was great. CakePay is easy to use, fun, and it made my restaurant checkout experience far more enjoyable. Here’s a quick summary of how it works (a more in-depth description can be found here): Install CakePay on your iPhone or Android phone and add your preferred payment card to it. At the restaurant, press the “Check In” and the app generates a four-digit code, which you show to your server. Your server... [Read More]

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Risk & Compliance Meet the New Financial Crime Sheriff: Analytics

Sheriff badge and spurs
Jul142016

The sheer scope of financial crime—money laundering, evasion of sanctions, financing of terror and other transgressions—is shocking. The past couple of years have been punctuated with blockbuster events like corruption at FIFA, the governing body of international soccer; the Panama Papers; and the 1Malaysia Development Berhad (1MDB) scandal. All of these crimes were years in the making, which makes me think there are many more still out there, still gestating. Recently the business press has done some excellent reporting on the challenges faced by banks in their de facto position as front-line financial crime fighters. For example, one global bank spent almost $3 billion on financial crime compliance in 2015, with a department staffed with 9,000 personnel. As a comparative data point, the bank’s 2015 revenues were nearly $60 billion. In another example, a Wall Street Journal article on terrorism financing said: “[Suspicious activity report] filings on customers—arriving at the... [Read More]

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