If a hacker gets into the cash-register software of a restaurant, captures credit card information and sells it on the Internet to counterfeiters all over the world, it could take months or years for police to pinpoint the source.
However, transaction processor First Data Corp. has added a new fraud-analysis tool to its Web-based SpendTrend program for credit unions to help police catch hackers faster and protect client credit card information.
The benefit of First Data’s SpendTrend Insights Fraud Analysis tool is the speed in which it can provide data to financial institutions pinpointing fraud trends, says Karen Postma, cards risk senior manager for The Members Group, the Des Moines, Iowa-based subsidiary of the Affiliates Management Co. “What used to take several weeks to compile is now just a touch of a finger on the website,” she tells PaymentsSource.
The Members Group, which advises credit-union clients about processing and payment services, announced July 20 it will be able to use the fraud-analysis tool with the 230 credit unions it serves across the country.
The Members Group credit unions already are clients of First Data, which designed SpendTrend and the new fraud-analysis capabilities. First Data maintains, hosts and stores the data on the website. Specific pricing information was not immediately available
The Members Group serves as “a second set of eyes” in helping clients analyze the data to determine if more fraud-prevention or detection measures are needed, Postma says.
“It’s an analytics tool that has been a huge help for us because it quickly reports common points of compromise and fraud trends, and is useful for offering analysis and fraud protections to the credit unions,” she says.
Insights Fraud Analysis compiles fraud-loss data in a couple of minutes for all of the cards used at a certain location at a certain time, enabling credit unions to warn their cardholders of potential fraud in a specific region, Postma says.
Insights Fraud Analysis already has helped stop a recent credit card fraud spree within a few towns in central Iowa in a matter of weeks instead of months, Postma notes.
“The fraudsters were creating counterfeit credit cards and using them to buy” Visa-branded prepaid gift cards, Postma says. “The data identified the trend and pinpointed locations, and we worked with local merchants and police who eventually arrested four people.”
Insights Fraud Analysis appears on the SpendTrend website as an added toolbar with two sections–Accelerator and Ad Hoc.
Accelerator shows fraud-data trends from across the country or state based on reports to merchants or police about illegal use of cards, providing details about potential crimes in person or online. SpendTrend delivers reports covering data from one specific day up to several months, Postma explains.
Ad Hoc shows data in “near real time” because the reports are displayed within 10 minutes after transactions occur, Postma says.
A major benefit of the fraud-analysis tool is clients can create hundreds of different queries related to transactions of confirmed fraud by merchant, amount and common location, she says.
Clients may build reports from either section of Insights Fraud Analysis and save them on the SpendTrend system to email to institutions that may need the data, Postma says. The analysis tool also provides a map of the United States that illustrates a ranking of which states experience the most fraudulent transactions, she says.
“Clients can compare data from other areas and determine if their institution is dealing with a typical situation or trend or if their fraud losses are way out of the norm and more prevention steps are needed,” Postma says. “The queries can pinpoint high-risk areas.”
A representative of First Data was not immediately available for comment.
Christine Barry, research director at Aite Group, a Boston, Mass.-based independent payments industry research firm, believes the fraud-analysis data would be “extremely attractive to credit unions and their members.”
A recent online survey she conducted with 83 credit unions indicated 47% of those institutions had experienced an increase in fraud losses over the last two years, Barry says.
“Customers are expecting their data to be secure,” she says. “They want the financial institutions watching for security.”
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