FICO Awarded Eight New Patents for Inventions in Credit Scoring, Fraud Detection and Predictive Analytics

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MINNEAPOLIS – September 20, 2011 – FICO (NYSE: FICO), the leading provider of analytics and decision management technology, today announced that it has been awarded eight new patents by the U.S. Patent and Trademark Office. These patents were awarded to members of the FICO Labs team, and were granted for inventions underlying FICO offerings in credit scoring, fraud detection and predictive analytics.

The new patents in credit scoring cover:

  • An algorithm used to explain the primary factors influencing a credit score based upon a rich data feed. FICO’s myFICO® website uses this technology to offer consumers and clients in the financial services industry insight into how consumer credit data is used and evaluated when calculating a FICO® Score.
  • An enhancement to the FICO® Credit Capacity Index™ that models the impact of future actions on a consumer’s subsequent credit risk.

The new patents in fraud detection cover:

  • A new system for predicting, detecting and managing financial transaction device fraud using mass compromise analytics. The system detects suspected compromise events, defines clusters of potential compromised credit cards, and enables specialized analysis or monitoring on a cluster-by-cluster basis. Using this, card issuers do not need to cancel or re-issue entire pools of compromised cards unless the cluster of potential cards shows indications of being used fraudulently. This technology will bolster FICO’s industry-leading fraud detection and prevention suite, FICO™ Falcon® Fraud Manager, and is likely to save card issuers millions of dollars.
  • A new system that delivers enhanced identity fraud protection as part of FICO™ Falcon® Fraud Manager for credit card issuers, credit-granting retailers, telecommunications carriers, full service banks, other credit grantors and their customers. This detection system uses newer, more powerful neural networks to identify, monitor and take action on potentially fraudulent cases.
  • A new system and method to monitor and detect anomalous transaction activity in telecommunications networks to detect misuse and provide solutions to resolve errors or reduce fraud.

Other new patents in predictive analytics cover:

  • Analytics that explore patterns in customer purchase behavior across time. This technology analyzes large-scale customer purchase transaction data to reveal the complex relationships between consistent product combinations that customers buy and the context in which they buy them. This information can illuminate specific lifestyle and life event-related buying tendencies that are often overlooked.
  • A system that helps databases integrate information regarding communications with business enterprises, efficiently sorting and storing such information as well as accessing and reporting it in a variety of formats. This will help businesses better understand which communications channels to use to connect with their customers, according to their preferences, improving the power and ROI of marketing and other efforts.
  • A methodology that efficiently transforms large or complex decision trees into compact, optimized representations. This makes decision trees significantly easier to view and use, and is part of the FICO Decision Graph feature embedded in FICO® TRIAD® Customer Manager and the forthcoming release of FICO™ Blaze Advisor® business rules management system.

FICO has been awarded 13 patents since the start of 2011 and holds 112 patents total. The company recently filed three more patent applications, and has another 106 patent applications pending in the United States and other countries.

"This latest round of patents is a tremendous credit to our entire FICO Labs team and a natural outgrowth of FICO’s culture of innovation and discovery,” said Dr. Andrew Jennings, chief analytics officer at FICO and head of FICO Labs. “Our advances in predicting customer behavior are essential for businesses that need to make smarter decisions in a changing economy with stricter regulations and higher customer expectations for speed, service and relevance.”

“Given the changes in the financial services industry, be they regulatory, consumer behavior or risk tolerance, the competitive advantage will be held by those who innovate around data and analytics,” said Frank Bria, research director at TowerGroup, a Corporate Executive Board company. “New and innovative ways to analyze data and make decisions coupled with intellectual property are critical for the dynamic financial services environment.”

About FICO
FICO (NYSE:FICO) delivers superior predictive analytics solutions that drive smarter decisions. The company’s groundbreaking use of mathematics to predict consumer behavior has transformed entire industries and revolutionized the way risk is managed and products are marketed. FICO’s innovative solutions include the FICO® Score — the standard measure of consumer credit risk in the United States — along with industry-leading solutions for managing credit accounts, identifying and minimizing the impact of fraud, and customizing consumer offers with pinpoint accuracy. Most of the world’s top banks, as well as leading insurers, retailers, pharmaceutical companies and government agencies, rely on FICO solutions to accelerate growth, control risk, boost profits and meet regulatory and competitive demands. FICO also helps millions of individuals manage their personal credit health through Learn more at FICO: Make every decision count™.

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Statement Concerning Forward-Looking Information
Except for historical information contained herein, the statements contained in this news release that relate to FICO or its business are forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the success of the Company’s Decision Management strategy and reengineering plan, the maintenance of its existing relationships and ability to create new relationships with customers and key alliance partners, its ability to continue to develop new and enhanced products and services, its ability to recruit and retain key technical and managerial personnel, competition, regulatory changes applicable to the use of consumer credit and other data, the failure to realize the anticipated benefits of any acquisitions, continuing material adverse developments in global economic conditions, and other risks described from time to time in FICO’s SEC reports, including its Annual Report on Form 10-K for the year ended September 30, 2010 and its last quarterly report on Form 10-Q for the period ended June 30, 2011. If any of these risks or uncertainties materializes, FICO’s results could differ materially from its expectations. FICO disclaims any intent or obligation to update these forward-looking statements.
FICO and “Make every decision count” are trademarks or registered trademarks of Fair Isaac Corporation in the United States and in other countries.

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