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May 18, 2007
The announcement was made at Fair Isaac's annual InterACT conference in San Francisco, where Fair Isaac presented a session on its research into click fraud. The company launched the study in summer 2006 with support from the Search Engine Marketing Professional Organization (SEMPO). SEMPO members and non-member pay-per-click advertisers contributed anonymous click-stream data to the study in exchange for analysis of their search engine advertising and potential click fraud.
"These early results represent a significant step toward addressing the problem of click fraud in online advertising," said Dr. Joseph Milana, chief scientist in Fair Isaac's Research and Development group. "Based on these preliminary results, we believe Fair Isaac's expertise and proven fraud detection technologies can be effectively brought to bear in helping to detect fraud in the pay-per-click marketing space."
Dr. Milana also indicated that more research into the problem is necessary.
"These are early results based upon a limited view of the market," said Milana. "We're looking for more advertisers to contribute to the study to help us arrive at a solid picture of the problem's size and scope across the broader marketplace and different vertical markets."
Click fraud occurs when advertisers pay for ad clicks that come from fraudulent sources instead of legitimate web traffic. A primary form of click fraud takes place when unscrupulous search engine affiliates/publishers in the ad networks arrange for repeated clicks on the site ads in order to increase revenue. Online robots or "botnets" as well as "click farms" of low-cost workers in remote countries are two mechanisms that perpetrate this type of fraud for profit.
Another common form of fraud occurs when employees of companies click on a competitor's ads to deplete advertising budgets and dilute results. According to Fair Isaac's study, fraudulent traffic as a result of malicious clicks by a competitor appears to be relatively contained and does not seem to have a significant impact on advertisers' bottom-line.
"Marketers have embraced pay-per-click advertising, but ways to defraud the system also have become more sophisticated," said SEMPO Chair Gord Hotchkiss. "Based on these early results, we believe the opportunity exists for our members to participate in an expanded study that can help further determine the extent of the problem and point the way to industry-wide measures for dealing with them."
In addition to using the company's patented, multi-entity profiling technologies used to successfully fight payment card fraud for more than 15 years, the study uses an anomaly detection engine - initially deployed in Fair Isaac's Network Assurance solution - to analyze advertisers' click-stream data, identify predictive patterns and generate a "pathology" score indicative of click fraud.
Fair Isaac's Falcon™ fraud detection solutions are known worldwide for their effectiveness in helping businesses in the financial services, telecommunications, healthcare and pharmaceutical industries reduce fraud losses and protect their customers from fraudulent transactions. The company's Falcon™ Fraud Manager solution protects 65 percent of the world's credit card transactions.
About Fair Isaac Fair Isaac (NYSE:FIC) makes decisions smarter. The company's solutions and technologies for Enterprise Decision Management give businesses the power to automate more processes, and apply more intelligence to every customer interaction. Through increasing the precision, consistency and agility of their decisions, Fair Isaac clients worldwide increase sales, build customer value, cut fraud losses, manage credit risk, reduce operational costs, meet changing compliance demands and enter new markets more profitably. Founded in 1956, Fair Isaac powers hundreds of billions of decisions per year in financial services, insurance, telecommunications, retail, consumer branded goods, healthcare and the public sector. Fair Isaac also helps millions of individuals manage their credit health through the www.myfico.com website. Visit Fair Isaac online at www.fairisaac.com.
Fair Isaac Statement Concerning Forward-Looking InformationExcept for historical information contained herein, the statements contained in this press release that relate to Fair Isaac, including statements regarding its Falcon™ product offerings, 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 any unforeseen technical difficulties related to the implementation, use and functionality of the offerings, the risks that customers will not perceive material benefits from the offerings, failure of the products to deliver the expected results, the possibility of errors or defects in the offerings, regulatory changes applicable to the use of consumer credit and other data, and other risks described from time to time in Fair Isaac's SEC reports, including its Annual Report on Form 10-K for the year ended September 30, 2006, and its quarterly report on Form 10-Q for the period ended March 31, 2007. Forward-looking statements should be considered with caution. If any of these risks or uncertainties materializes or any of these assumptions proves incorrect, Fair Isaac's results could differ materially from Fair Isaac's expectations in these statements. Fair Isaac disclaims any intent or obligation to update these forward-looking statements.
Fair Isaac and Falcon are trademarks or registered trademarks of Fair Isaac Corporation, in the United States and/or in other countries. Other product and company names herein may be the trademarks of their respective owners.
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