As I’ve discussed many times on this blog, criminals these days are doing more damage through remote channels — especially using compromised card information, which is proving more accessible and lucrative than counterfeit or stolen cards, thanks in large part to the success of chip and PIN technology. For more evidence, see the new report FICO released that shows the high rate of card-not-present (CNP) fraud on Germany's credit cards in 2012.
Chip and PIN coupled with far more robust fraud defences in the card present space, such as card issuers using FICO® Falcon® Fraud Manager to protect their card spend at ATMs and points of sale, has cut counterfeit fraud for German issuers using Falcon Fraud Manager to just 20% of the fraud total. But the fraud reductions in the card-present space have pushed CNP to 70% of the fraud detected.
How do you fight back? As my colleague Martin Warwick noted in FICO’s news release, the key is to flag transactions that fall outside of the cardholder’s specific online spending patterns. That’s easier said than done, but new analytics for FICO Falcon Fraud Manager is strengthening card issuers’ ability to distinguish between a customer’s regular or preferred activity and activity that is anomalous or suspicious. FICO’s latest Insights white paper explains how this works (registration required).
Both adaptive analytics and behaviour sorted lists are new, patented technologies that are driving greater insight into customer behaviour. This will be especially important in markets like Germany where card fraud is on the rise — the country’s total card fraud losses rose 140% since 2006, as illustrated in the FICO European Fraud Map.