Fraud Alert Management The Power of an Integrated Approach. Eric Kraus, Sr. Director Fraud Product Management

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1 Fraud Alert Management The Power of an Integrated Approach Eric Kraus, Sr. Director Fraud Product Management

2 FIS Fraud Management Who We Are

3 FIS Fraud Management 7,600+ financial institutions served 47 million+ active accounts on file 4.9 billion transactions per year 6.3 million fraud alerts $1.1 billion fraud prevented 1 million+ chargebacks processed 5.4 million customer calls 3

4 FIS Fraud Management We partner with financial institutions. Transparent partner to help financial institutions better manage their customer relationships Reduced risks mean increased profits for our clients We simplify the business for our partner financial institutions while helping them manage fraud risk We deliver innovative and high-quality products and services. Integration of authorization controls and neural network services with fraud and risk analytics Client control through distributed case management, custom neural network rule servicing and individualized fraud strategies Thought leader in the fraud space, providing industry updates, emerging fraud trends, issuer forum and specialized dashboards We stop fraud before it happens. Translate industry standards and apply proven technology to create enhanced services that help our financial institution partners differentiate themselves from their competition Transform data into useful information and effective services through intelligent analytics 4

5 Integrated Debit and Credit Fraud Management

6 Benefits of consolidated Credit and Debit Card Authorization Data Greater insight into fraud trends Fraud patterns which are impacting an institution are more readily identified when a more robust set of data is available for analysis. Such is the case when Credit and Debit card data is combined Common point of purchase investigations are more complete, as both Credit and Debit card history may be considered during research Mitigation strategies protect both portfolios Strategies which are deployed for Credit cards will also protect Debit cards, and vice-versa. This is especially beneficial when combating flash fraud trends or data breaches FIS observed a particular lift from this phenomenon during the 2008 / 2009 Heartland data breach. Further details are on the following slide 6

7 Benefits of consolidated Credit and Debit Card Authorization Data Fraud Transactions per BIN Q Q Q Q Credit Debit During last year s Heartland data breach, fraudsters aggressively targeted credit card BINs, partially attracted by the higher open to buy on credit cards. Debit fraud was much less prevalent. However, after the attack on credit cards, the fraudsters moved on to debit cards, with debit fraud overtaking credit by Q on a transaction per BIN basis. Processing Credit and Debit together created a proactive situation where the Credit Heartland strategies were already in place when the fraud shifted to debit cards. 7

8 FIS Fraud Alert Management

9 FIS Fraud Alert Management Neural network engine Rule based and score based fraud strategies Incorporates Falcon scoring models Credit model Split sig and PIN debit model Consortium macro view of industry Falcon fraud models protect 65% of all cards issued worldwide 90 of the top 100 domestic US financial institutions utilize falcon fraud models Employs visa advanced authorization data Reviewing MasterCard s EMS data for potential certification Ability to introduce proprietary scoring data Real time auth decision capabilities at the point of sale Integrated IVR Fraud monitoring and alert management available 24/7/365 9

10 Falcon Fraud Manager TM Patented Profiling System # $ # $ $ $*

11 Credit / Debit Card Fraud Mitigation Neural network scores each authorization. Score based rules are used to identify high risk authorizations. Auth can be declined at point of sale. Cardholder can be contacted. Account can be temporarily blocked pending validation of activity. Incorporate additional data feeds to strengthen defense in depth approach. Analytically-derived rules supplement score-based rules. Target flash fraud trends. Reduce other known high risk activity (not score based). Minimize impact to legitimate cardholders. 11

12 Credit / Debit Card Fraud Mitigation Data from Falcon is combined with information from other source systems in a data warehouse. The analytics team then leverages business intelligence tools to identify trends and mitigate fraud. 12

13 Credit / Debit Card Fraud Mitigation Information from the data warehouse is used to isolate outlier increases in activity. Rules are then written to combat fraud in these hot zones. High volume activity from Cyprus and St. Kitts is correctly identified as abnormal. In contrast, the UK high volume is recognized as in-line with the norm. 13

14 Credit / Debit Card Fraud Mitigation Analytics is used to isolate which variables are most indicative of fraud. These factors are then used in rule writing to capture the maximum fraud dollars. California grocery activity over the period of 1/1/2009 2/18/2009 KF (Blue)= Confirmed Fraud CV (Yellow) = Confirmed Valid The impact to valid cardholders is minimized by creating rules which only fire when high risk criteria are met 14

15 Alert Management Work Flow 1 Merchant Switch Fraudster 3 Fraud Alert 4 Fraud Alert Specialist Model 2 FIS Neural Network RT Decline/ Fraud Alert Fraud Confirmed Transactions pass through FIS Fraud Alert Management neural network Transaction Analyzed; trans can be declined and / or fraud alert generated 6 5 CH 15

16 Transparent Insight Confirmed Fraud Reporting (daily and monthly) Report listing accounts blocked due to fraudulent activity Fraud Alert YTD Activity Report Year to date statistics related to accounts worked via Fraud Alert Management Industry information, fraud trends, scam alerts, test merchant lists, etc. provided electronically via our website: 16

17 Fraud Alert Management Services Turnkey FIS serviced Shared rules Common threshold Case management Cardholder contact 24 /7/365 coverage Fraud reports Distributive client managed Custom rules / threshold Custom case management Cardholder contact In-house temp block decisions Client involvement Full control Client staffed Full customization Optional FIS after hours service for 24/7/365 business continuity 17

18 FIS Fraud Management Purpose To provide peace of mind by making electronic transactions, safe, simple and secure 18

19 Never Compromise FIS Fraud Management committed to: Leveraging our power to integrate through advanced technology and proprietary predictive analytics Integration initiatives transparent and seamless for clients: No disruption of service No impact to the cardholder experience Continued focus on preventing fraud and mitigating risks 19

20 Thank You Eric Kraus, Sr. Director Fraud Product Management Office: