Fico, a leading predictive analytics and decision management software company, has partnered with 41st Parameter, a part of Experian and a leader in securing online relationships, to fight fraud on card-not-present (CNP) transactions, the top source of payment card fraud today, while letting more genuine transactions proceed in real time.
FICO is integrating 41st Parameter's TrustInsight™ with the FICO® Falcon® Platform, which protects 2.5 billion card accounts and is used by more than 9,000 financial institutions worldwide. Authenticating the device being used in a transaction provides yet another layer of detection to the Falcon Platform, which includes proprietary analytics based on more than 30 patents.
FICO's research shows that total card fraud grew 13 percent in the U.S. from January 2012 to September 2013. CNP fraud accounted for nearly half of credit card and debit card fraud during this period.
41st Parameter's TrustInsight™ solution provides a real-time analysis of a transaction, crowd-sourced from a network of merchants, that produces a TrustScore™ indicating whether the transaction is likely to be genuine and should be approved. TrustInsight helps reduce the number of "false positives," or good transactions that are declined or investigated by the card issuer. The TrustScore, integrated with the FICO Falcon Fraud Manager Platform, provides a link between data the merchant knows and data the issuer knows to enable issuers to utilize additional information that is not currently available in their fraud detection process, including the identification of a cardholder's "trusted devices."
For instance, if a cardholder is on vacation and tries to purchase a flight online, Falcon Fraud Manager's advanced analytics might rate this as a suspicious transaction if the location and the value were unusual for the cardholder. TrustInsight could identify that in fact the cardholder was using their own mobile phone for the transaction, which makes the transaction far likelier to be genuine.
"The future of payments is online and mobile, where the card is not present," said T.J. Horan, vice president for Fraud Solutions at FICO. "Integrating 41st Parameter's TrustInsight technology with the FICO Falcon Platform score will enable issuers to increrease the approval rate, and corresponding revenue for CNP transactions. With TrustInsight, we believe issuers can recover more than 30 percent of transactions declined for fraud reasons that are actually false positives. The entire online commerce ecosystem will benefit, including significant improvement in customer experience, added consumer confidence, and additional revenue for merchants and issuers."
"Most companies just don't know their online customers, and if you can't recognize your customers how can you authorize transactions?" said Ori Eisen, founder and chief innovation officer at 41st Parameter. "41st Parameter advanced technology provides FICO's worldwide Falcon customers, and their cardholders, additional protection against today's biggest card fraud threat. FICO's commitment to seeking out and incorporating the most innovative solutions into their products is integral to their market reputation."