Putting Card Fraud to the Fire. Diana Kern, AAP senior trainer

Transcription

1 Putting Card Fraud to the Fire Diana Kern, AAP senior trainer

2 Disclaimer: The following does not constitute legal advice. The information provided herein may not be applicable in all situations, should not be treated as legal advice, and should not be acted upon without specific legal advice from your counsel based on the facts and circumstances of your institution. SHAZAM makes no representations or warranties as to the accuracy or completeness of this information. 2

3 Fraud products and services Fraud statistics Fraud trends Compromised cards 3

4 NEURAL NETWORK Case Alerting AFTER AUTHORIZATION OF TRANSACTION COMPLETED Doesn t decline or block immediately Creates case for review Cardholder contacted by issuer or third party Rules Transaction score Other elements based on cardholder history & consortium data 4

5 NEURAL NETWORK Case Alerting Example Rules AFTER AUTHORIZATION OF TRANSACTION COMPLETED If score > ### If card present AND If merchant category code = If merchant name is/includes If card not present AND If merchant location = Use these in combinations Address current fraud trends Demand flexibility, quick response 5

6 NEURAL NETWORK Real-time Scoring PART OF AUTHORIZATION DECISION Split-second analysis & decision Using fewer data elements Based on recent activity Decline transaction if Meets score threshold Meets specialty rule criteria Signature- and PIN-based transactions differentiated Do you know What transactions are scored real time? At what point during the authorization process? What specialty rules are in place? How do you get notified of new specialty rules? Are those rules short or long-term? 6

7 AUTHORIZATION BLOCKS BY TRANSACTION CRITERIA Block can effect All cards issued on a BIN One PAN Exclude one or more PANs Example criteria includes Country code Merchant category code Amount Merchant name Combinations of data How do you add, edit or remove? 7

8 DAILY LIMITS Reasonable and manageable SET LIMITS THAT ARE Functional Low enough to prevent catastrophic losses Adjust as needed short-term for special purchases Know your cardholders spending habits 8

9 DAILY CARD LIMITS The ideal limit is manageable for cardholders, and low enough to avoid large losses. 9

10 CARDHOLDER ALERTING Via mobile device Register card(s) to Receive alerts Internet, international or over specified amount Neural network case notice User account changes such as password reset or new device registration Cardholder controlled temporary block Person-to-person payments Brand rules Visa: October 14, 2016 MC: April 21,

11 2015 SHAZAM FRAUD RATE TREND PIN Signature - NET SHAZAM Overall 0.08% 0.07% 0.06% 0.05% 0.04% 0.03% 0.02% 0.01% 0.00% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 11

12 2015 SHAZAM FRAUD REPORTING CATEGORIES 2% 1% 58% 39% Stolen Lost Counterfeit Acct Takeover Fraud Apps NRI CNP 12

13 2015 VISA REPORTING CATEGORIES 4,000,000,000 3,500,000,000 3,000,000,000 2,500,000,000 2,000,000,000 1,500,000,000 1,000,000, ,000,000 0 Lost Stolen NRI Fraud App Counterfeit Acct Takeover CNP US Worldwide 13

14 2015 MASTERCARD REPORTING CATEGORIES 3,000,000,000 2,500,000,000 2,000,000,000 1,500,000,000 1,000,000, ,000,000 0 Lost Stolen NRI Fraud App Counterfeit Acct Takeover CNP US Worldwide 14

15 Card Not Present 58 % 5% increase from 2014 Mail/Phone/Internet (ecommerce) Valid card data Cardholder has possession of card Account testing, then reversal Brute force attack Automated program Use Verified by Visa /SecureCode 15

16 PHISHING IS STILL A PROBLEM Attempts to get card data including PIN, CVV2/CVC2 Social engineering Microsoft scam results in PIN-based Internet fraud FI scam Targets issuers newly switched to EMV Fraudster impersonates cardholder and requests new card IRS scam during tax time 16

17 SAMPLE PHISHING 17

18 COUNTERFEIT FRAUD Valid account information encoded on bogus card s magnetic stripe Cardholder has legitimate card Fraud in different state/country Threats to card data security POS malware Skimming Pay at pump ATM Often results in local fraud 39% 4% decrease from

19 COUNTERFEIT CARD PRESENT INCREASE IN LATE 2015 Coincided with liability shift effective October 1, 2015 Created fire sale for fraudsters Card data obtained from past breaches (Target, The Home Depot and others) International activity increase (Turkey, China, Honduras and others) 19

20 POS MALWARE 20

21 DOES THIS LOOK SUSPICIOUS?

22 CLOSE-UP OF SKIMMING DEVICE

23 SKIMMING DEVICE Inside the cover you can see the skimming parts.

24 NORMAL VIEW OF THE ATM What s different about the card reader now?

25 PREVENT SKIMMING AT YOUR ATMS Check on premise terminals multiple times each day Assign responsibility for checking off premise terminals At busy terminals devices left only for a short period of time Look for signs of tampering Skimmer devices Residue from adhesive Monitor for unusual or more frequent outages Security video Ensure it s positioned correctly View it daily Leave hardware as-is and notify law enforcement immediately 25

26 Counterfeiting & Chip Cards (EMV) Chip cards still contain magnetic stripe Track data at risk Chip service code resides on mag stripe Counterfeit card at EMV enabled terminal Magnetic stripe tells terminal it s a chip card Insert in chip reader Counterfeit card at non-emv enabled terminal 26

27 IDENTIFY AND RESPOND TO A FRAUD TREND 3 or more PANs with similar fraud Card present/card-not-present Similar merchant type Similar location Similar amounts Detected by neural network? Create custom rule Add block criteria for the BIN Identify common point of purchase through history query 27

28 COMPROMISED CARD ALERTS MasterCard ADC-1234-US-16 Account Data Compromise 4 digit alert number Region in which compromise occurred 2 digit year Visa US PA Region in which compromise occurred Year in which compromise occurred Sequential alert number 4 digits Type of alert PA proactive alert IC Internet compromise 28

29 CARD DATA COMPROMISE Handling Options NOT ONE SIZE FITS ALL What data is at risk? What is the window of exposure? Hot card & reissue new PAN Temporary block until new card arrives? Force reissue with same PAN, push expiration How many are due to expire soon anyway? Cardholder controlled block Lower limits temporarily New neural network rule Notify cardholder 29

30 2016 DATA BREACHES 30

31 REMINDERS Cardholder education On hold message Multiple web page messages Fraud prevention & detection marketing materials Low and manageable daily limits After-hours hot carding option Promote use of PIN when making purchases 31

32 CONTACT INFORMATION Diana Kern, AAP Senior Trainer SHAZAM, Inc Pioneer Parkway Johnston, IA

33 Putting Card Fraud to the Fire Q & A Thank you for participating today!