How to Spot Counterfeit Cards — It Takes a Network

I was pleased to read last week that French and Spanish police, with Europol support, had taken down a criminal network that was selling counterfeit cards for use on road tolls. The estimated damage was over half a million euros.

Close cooperation between law enforcement, card schemes and industry bodies helped dismantle 11 counterfeit card factories and 15,000 blank counterfeit  cards. Over 30,000 fraudulent toll gate transactions have been linked to this criminal network.

Many banks focus purely on financial losses and choose not to engage law enforcement, as they view it as uneconomical (since the time spent in investigations often costs more than the fraud itself). I hope cases like this will make banks think again. Bringing down such a network sends a message to the criminal community that fraud is treated seriously and that fraud isn’t the low-risk, high-reward career choice that some portray it to be.

One point about the story startled me. The method the fraudsters used in this case was surprisingly low-tech, compared to what we see in banking fraud. Counterfeit cards are relatively simple to spot and the scale of this attack should have caused the red lights to flash in even the most basic fraud detection system. So how were the criminals successful?

Stopping Counterfeit Fraud

The source of counterfeit cards data isn’t usually from one specific bank, but more often the result of a card terminal at a shop, a retailer’s database or an ATM being compromised. This means that cards from many different issuers are compromised at the same time. Individual banks may find it hard to spot the fraudulent transactions, since each bank may only have a few cards compromised.

Here at FICO we hold the world’s largest consortium of fraud and non-fraud card transaction information — the FICO Falcon Intelligence Network, part of the FICO Falcon Platform. This network spans over 9,000 individual banks and some 2.6 billion card accounts. Where individual banks are searching for a needle in a haystack, our vast network means that attacks like these are much easier to spot.

We recently announced that our FICO Card Compromise Manager solution now harnesses the power of the Falcon Intelligence Network to notify issuers of compromised cards — often before they are used fraudulently. This enables banks to take early action, stopping the fraud before it is even attempted, which both protects their customers and frustrates the criminals.  In my view this solution is game-changing and shows again how collaboration can make life very difficult for criminals.

The next time you hold your fraud strategy review keep in mind that it’s not just the new, high-tech attacks you need to defend against. Fraudsters will continue to choose the path of least resistance until you shut it down.