Tag Archives: Authorizations

As frequent readers know, I'm a strong advocate for using adaptive analytics in credit card fraud detection. Some may wonder: Could the same analytic technology also boost fraud protection for debit cards? The answer: Absolutely! First, a quick primer on adaptive analytics. These models continually "adapt" traditional neural network fraud models in response to real-time fraud tactics, some of which may have not been present during model training. This ability to learn from in-production fraud trends helps financial institutions recognize newer schemes and consequently catch more fraud. We recently tested the value of using adaptive analytics on a FICO debit consortium model, specifically our recently released FICO® Falcon® Fraud Manager UK-Ireland Debit 12.0 model. Adaptive analytics detects 6% more fraud accounts at a 10:1 account false positive ratio (AFPR). By keeping the detection rate fixed, adaptive analytics reduces the model’s false positive ratio by more than 10%, up to a 40% account detection rate (ADR), as shown in the...

Last summer, a $1.5 million bank/wire fraud case garnered quite a few news headlines. A bank account of a California-based escrow firm was hacked, and three payments totaling $1.5 million were wired to accounts in China and Russia. Only $432,215 was recovered, and the loss forced the escrow company to shut down. Experts say that such online fraud attacks have been significantly spiking since 2012. Corporate bank account takeover fraud loss is estimated to cost $347 million to businesses in North America in 2014, and this loss is expected to grow to $371 million by 2015. While small to midsize businesses are taking the biggest hit, consumer banking customers could be next in the bull's eye. The impact of online fraud, as most banks know, is not just financial losses from the fraud itself. Banks must also deal with high reputation risks and erosion of customer trust, leading to revenue loss spillover in other products as well. How can banks ensure secure transactions, while still providing customers the flexibility of 24x7 online banking at...

This morning, we announced that FICO is acquiring Adeptra, a leader in customer engagement and risk intervention solutions. The deal is expected to be completed next month. I’m excited about this news, because I have seen the value that Adeptra’s technology can add to decision management in areas such as fraud. Going back to 2002, Adeptra’s fraud resolution technology has been integrated with FICO Falcon Fraud Manager for many global clients. Here’s how it works: Once a suspicious transaction is flagged by Falcon, Adeptra’s system determines the best way to contact the customer to verify the transaction is genuine. Using voice, SMS, email or messaging through mobile apps, the consumer is then contacted in real time, enabling fast resolution of the risk condition. We have seen this reduce losses per case by 50%, based on reaching the consumer faster, and through the channel that the consumer prefers. Adeptra has helped many of our mutual clients improve the experience they provide to their customers.  With this acquisition, we will be integrating...

What are the top fraud threats to financial institutions?  How are they fighting back? New results from our Faces of Fraud Survey provides some answers—and a few surprises.The survey, conducted by ISMG and sponsored by FICO, polled hundreds of financial institutions, primarily banks but also credit unions and payment processors. Questions were designed to gauge the scope of the fraud threat in the US, measure industry preparedness, and identify anti-fraud strategies and technologies that institutions are employing and investing in. Here’s what we saw:Top fraud threats. Topping the list of fraud problems were payment card fraud, check fraud and phishing/vishing.  Specifically, 82% of respondents experienced credit/debit card fraud in 2010, 63% check fraud, 40% phishing/vishing, 37% ACH/wire (account takeover) and 32% third-party POS skimming.When is fraud detected?  It’s telling that more than 75% first learn of fraud incidents from their customers.  That means institutions are spending a lot of time cleaning up fraud problems after...