MARLBOROUGH, Mass. — In mid-2008, Digital Credit Union initiated a customized approach to fraud mitigation for its card portfolio that enabled it to implement analytically derived rules designed to supplement neural network, score-based fraud strategies.
By working together with the Fidelity National Information Services' Fraud Analytics team, the CU was able to target specific flash fraud trends impacting its portfolio, and reduce other known high-risk transactional activity-while ensuring minimal impact to legitimate cardholders.
Digital CU was selected as a best practice winner by Credit Union Journal for its innovative approaches to credit and debit card fraud prevention.
Its work has:
- Led to identifying a regional compromise in its area and bringing it to the attention of Visa, which became an actual CAMs event impacting other issuers.
- Reduced quarterly gross fraud average by 57.1% in Q4 2008 over Q1 2008.
- Realized a 58.4% reduction in fraud-to-sales ratio in Q4 2008 over Q1 2008.
- Realized a 43.9% decrease in average fraud loss per card in Q4 of 2008 over Q1 2008.
- Realized an overall reduction in costs beyond that of direct fraud loss expense-reducing chargeback expenses.
- Reduction of re-issue expenses tied to comprise events, relying more on targeted fraud rules and strategies to mitigate fraud exposure proactively.
Craig Roy, SVP, support services for Digital CU, said that there were two reasons the credit union made the changes it did.
"One was to mitigate the fraud losses we were seeing with debit and credit cards," Roy said. "Two was the choice we were using before-we were negatively impacting too many cardholders. We would block cards, block re-issue. We wanted more control. We wanted to be able to do this at the individual cardholder level, instead of everyone as a whole. This allows us to narrow down what we want to do, while at the same time gives us more mitigation options."
All of these fraud initiatives and performance improvements took place in the face of increasing fraud trends throughout the industry, said FIS.
"The knowledge and savvy of the DCU fraud team, regarding fraud best practices is apparent in the way they implement and utilize the prevention tools at their disposal," FIS wrote in its nomination about Digital CU. "Futhermore, they never lose sight of the need for strong member and cardholder relationships, always balancing their fraud strategies against the impact to legitimate cardholder spending activity."
Best Practices CUJ 2009
CU: Digital
Best Practice: Reduce Losses, Card Risks
Vendor: Fidelity National
