Clari5

Menu

Tag: credit card fraud

Are banks using customers’ ‘Situational Intelligence’ for effective real-time fraud protection?

Posted on by Clari5


How can you make your bank’s customers control transactions on their accounts and use it as an effective fraud protection mechanism? Customer communication and preferences can be vital in detecting fraud early and costs far less.

Consider the following scenarios:

  • A customer is going on vacation to Switzerland for 2 weeks and he wants all the card transactions (debit card and credit card) originating from home country to be blocked for the next two weeks.
  • Customer wants all fund transfer (Third Party transfer) transactions originating from his internet banking account at any location in home country to be blocked for next 2 months as he is travelling to US for business.
  • Customer runs a domestic business and doesn’t travel abroad. The customer wants to disable any transaction originating abroad.
  • Customer wants all payee addition transactions to be blocked in his account till he turns this feature on (aka Facebook privacy settings).
  • Customer wants to be alerted of any attempt of transaction of more than a set limit with the option to respond with a decision to decline or authorize the transaction (aka. reverse positive payee used for cheque transactions in the commercial banking world).
  • Customer holds multiple credit cards and uses a specific credit card for all his ‘Card Not Present’ transactions (online payments). Customer wants all the CNP transactions to be blocked on all his other debit/credit cards.
  • Customer wants to block or fix specific limits for purchase of electronic or jewelry items on his debit/credit card.
  • Customer wants to limit the use of his debit card/credit card to any particular state/states within the country.

In all these scenarios, the bank customers provide the vital situational intelligence which can be built into the banks’ processes for effective fraud protection.  In turn, customers also benefit with the convenience of banking on their own terms and securing their accounts.

If you think this is too futuristic, you may be wrong. Reserve Bank of India’s expert committee on customer service in banking has published recommendations to this effect (Report of the committee on customer service in banks). We might see these recommendations getting implemented by Indian banks very soon.

Bank’s core system i.e. core banking, internet banking and credit card processing systems, however modern they may be, are ill-suited to handle this kind of agility. Current generation systems can at the best match a transaction to a bank maintained blacklist and stop a transaction when an entity match occurs.

Banks need to handle this using agile fraud management system which can take this situation intelligence into consideration as part of its decision making strategy for fraud protection. What banks need is a dynamic fraud management system that can digest the relevant information about the debit blocks/limit preferences customer has opted for the given time period and the same system is used for real-time fraud protection.

A real-time fraud protection system monitors every transaction and decides whether to allow, decline or challenge based on the fraud risk system inherently derives or based on the customer provided situational intelligence. This is an example of a technology that can truly achieve the dual objectives of enhanced customer experience and improved fraud control.

How do you see your institution using customer context based intelligence for better fraud prevention?

Fraud-proofing Credit Cards Intelligently

Posted on by Clari5

While credit cards have transformed purchase transactions, it has not been without simultaneously growing vulnerabilities.

Financial fraud losses across payment cards, remote banking and cheques totalled £755 million in 2015 – a 26% jump when compared to 2014 says Financial Fraud Action UK.

It says that the rise across all fraud loss types during 2015 owes much to the growth of impersonation and deception scams, as well as sophisticated online attacks such as malware and data breaches.

Of the prevalent card-frauds, card-not-present (CNP) and payment fraud, CNP (where the card holder needn’t be present online or phone for the transaction) is the dominant form of card fraud in Europe in addition to the UK.

Payment fraud not only involves falsely creating or diverting payments; it goes to the extent of creating false accounts and scamming on a large scale. A merchant account created for a seemingly genuine organization performs transactions through the stolen credit cards.

The UK tops the highest jump in credit card fraud in Europe with an 18 percent rise resulting in £ 88 million of losses.

Increased rate of personal data compromise through data breaches was one likely cause for the jump.

Credit Cards Theft Concept. Hacker with Credit Cards on His Laptop Using Them For Unauthorized Shopping. Unauthorized Payments

Globalization and technology driving credit card fraud

The ability to contain scams is challenging given globalization. With financial organizations spreading their wings across geographies, the ‘law-of-the-land’ comes in to focus.

Each country has specific policies and laws that banks have to abide by leading to a lack of a common security cover. This leads to vulnerabilities let alone the effort involved in understanding laws, creating policies and maintaining them.

Hi-tech card fraudsters rely on technology as they look for ways to compromise customers’ personal and financial details and use that to commit frauds.

They hack into systems, run random generated bank account numbers and sometimes approach as legitimate organizations and lure information under the pretext of seeking data via email, text messages and phone calls made to seem as if they are from tax departments with threats of deportation or imprisonment.

Enter EMV and NFC

Europe was one of the early adopters of EMV (Europay, MasterCard, Visa) – a global security standard for chip-cards and the technology used to authenticate chip-card transactions.

EMV helps when the physical card is required for a transaction, protects from counterfeiting, CNP fraud continues to thrive. View the stats.

A CNN Money report features a claim by a security company having discovered a way of rewriting magnetic chip code to make it look like a chip-less card. This takes it back to the basic fraud technique of counterfeiting.

NFC allows smartphones and other devices to communicate with each other when they’re physically very close. NFC can also be present in wearable devices.

NFC has gained some movement in the US and is now being launched in Europe. According to Markets & Markets, the NFC market is expected to touch $22 billion by 2020.

While the technological advancements are definitely encouraging, they point to a fundamental question on fraud-free credit card transactions – can a channel centric (in this case, credit card only) approach be a fool-proof solution?

E-commerce.

Solutions must rely on ‘absolute real time cross-channel intel’

While card security technology has evolved from signature cards to chip-and-pin cards and now to NFC, they will deter sophisticated, hi-tech fraudsters from inventing newer techniques in staying a step ahead.

Anti-fraud solutions cannot merely rely on a channel-centric approach. They will have to rely on advanced technologies that harness the collective wisdom about customers (factual and behavioural) already resident across a bank’s systems, pull the collective cross-channel insights at lightning speed from all channels to detect and thwart fraud intelligently in absolute real-time even as the fraud is being committed.

This gives banks an edge over fraudsters because channel-specific fraud relies only on breaching that particularly channel’s (credit cards) data.

If banks are in the know of suspect transactions while it is in progress, they can prevent the fraud from being committed in the first place instead of taking action post-incident when the deed is done.

Absolute real time anti-fraud technology coupled with continuous monitoring, stringent regulatory compliance and improved auditing are some of the primary measures banks must adopt to stay ahead of evolving fraud technology.

5 Min Guide to Data Breaches

Posted on by Clari5

5 Min Guide to Data Breaches

So, how far is your data protected??

Percentage of Data breaches is enormous & this fraud increases exponentially in developed countries. As there are so many types of data breaches and it is difficult to monitor all breaches in real time because of which consumers feel insecure at the time of financial transaction. We use technology to prevent information from fraud but in such cases technology is incapable in making our payment safer. Data breaches strike the people of all ages either intentionally or un-intentionally.

According to Federal Trade Commission Consumer Sentinel Network Data Book, globally total data breaches were 1541 in 2014 & at the same time, the total data records lost or stolen were 1023,108,267 that emerged as the largest form of fraud worldwide.

This infographic below reflects this global fraud scenario.

 

By Priyanka Gautam 

Reach her at clari5@customerxps.com

CustomerXPs offers real-time, intelligent products that empower banks with instant insights enabling influenced outcomes of deeper customer engagement and fraud-free transactions.

Learn more about CustomerXPs Clari5