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News

Card not present fraud detection with Fair Isaac's Falcon

Fair Isaac : 12 December, 2007  (New Product)
Advanced fraud detection system based on real time analysis prevents losses
In response to industry research on retail fraud losses, Fair Isaac has announced that it delivers advanced fraud detection solutions to help merchants identify and thwart card-not-present (CNP) fraud in real time and safely approve more transactions with less risk.


CNP fraud involves the theft or misuse of card details to pay for goods and services online, by phone or by mail order. Most merchants in the retail and travel industries assume 100 percent of the fraud risk for goods sold through these channels. CNP fraud has become a key challenge for merchants globally, resulting in lost revenues and higher operational costs.


"Card-not-present fraud is increasing in every region around the globe, and at double-digit rates in the US and UK markets," said Dennis Moroney, Senior Analyst, Bank Cards, at TowerGroup. "The growth of e-commerce, along with the importance of mail order/telephone order retailing, especially during the holidays, puts especial emphasis on the importance of winning — and in some cases regaining — consumer confidence."


Fair Isaac's Falcon Fraud Manager for Merchants prevents the loss of legitimate sales by using the company's patented neural network models and profiling technology to detect minute deviations from normal spending patterns and generate a fraud score. Based on scoring thresholds and merchant-specific fraud prevention rules, the ASP solution enables rapid review of suspicious transactions and intervention before losses are incurred.


Fair Isaac's Falcon Fraud Manager neural network models are built with knowledge gained from billions of purchases worldwide. Profiling technology captures cardholder characteristics and analyses them against real-time transactions. Profiles are based on data generated by thousands of merchants using Fair Isaac's Falcon Fraud Manager technology in millions of transactions every month, enabling the models to learn continuously and update the profiles with new data.


"In any situation where a card is not present and merchants are unable to complete a face-to-face transaction, the opportunity for fraud increases dramatically," said Raymond Boyle, vice president, Retail Client Services, at Fair Isaac. "Techniques used to perpetrate this kind of fraud are becoming more sophisticated. Closely managing transactional fraud while only minimally impacting legitimate customer sales is a fine balancing act that requires a higher level of technology. Every dollar of fraud captured during the transaction process goes directly to the bottom line. Having led the advancement of fraud protection technologies for more than a decade, Fair Isaac is the right company to help the industry combat this problem."


A recent study released by the UK-based Association of Payment Clearing Services (APACS) shows a similar CNP fraud trend in the UK. According to APACS, CNP fraud losses on UK-issued cards grew from £10 million to £212.6 million between 1997 to 2006, increasing by 16 percent in the last year alone.


Recognised as the leading global payment card fraud detection system, Falcon Fraud Manager protects more than one billion payment cards across six continents from fraud. It saves businesses millions of dollars every day in the financial services, retail, telecommunications and government sectors and is used by 20 of the top 25 financial institutions worldwide.



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