BAI Retail Delivery Conference & Expo, Booth # 1417 - CheckFree Corporation (Nasdaq: CKFR) today announced that more than 40 financial institutions will deploy CheckFree FraudNet, an automated fraud detection and case management system, by the end of 2006.
Two of the nation's top 10 national banks, five super-regional banks, as well as brokerage firms, credit unions and community banks, are among the institutions that have already implemented CheckFree FraudNet and achieved tangible results.
CheckFree FraudNet was introduced in November 2005 to help ensure that receiving and paying bills online remains safer than offline, paper-based bills and payments. The system helps mitigate risk and reduce fraud for banks and consumers before it happens, which helps make paying bills online even safer for consumers.
New Payment Protection Terms Announced
CheckFree also announced today that consumers who pay bills online through banks that utilize CheckFree FraudNet will receive enhanced payment protection beginning in January 2007. CheckFree will cover all of a consumer's late fees resulting from a delayed payment for payments up to $50,000, as long as the payment was scheduled within the service's terms and conditions. In addition, CheckFree will cover a consumer's liability, up to $50, in the case of an unauthorized payment.
For customers using non-FraudNet-protected online banking sites to pay their bills, the existing CheckFree Guarantee remains in effect, covering late payment charges of up to $50 if a payment posts after its due date, provided it was scheduled according to the service's terms and conditions.
"We know consumers are safer online than offline and they are safest online at financial institutions," said Matt Lewis, executive vice president and general manager of CheckFree's Electronic Commerce Division. "With FraudNet, CheckFree and financial institutions are providing added protection by proactively monitoring and stopping fraud before it happens, as well as limiting a consumer's exposure to expenses related to delayed or unauthorized payments. For consumers, CheckFree FraudNet is one more reason why receiving and paying bills online is safer and more secure than traditional paper-based methods."
CheckFree FraudNet can help significantly reduce losses for participating banks, as well as provide data on attempted fraudulent transactions to help law enforcement officials apprehend and prosecute fraudsters. The system combines CheckFree's cumulative knowledge of payment patterns and a sophisticated analytics engine to help financial services organizations detect and stop unauthorized payments before they are completed.
CheckFree FraudNet scores each online bill payment, enabling potentially fraudulent transactions to be identified and stopped before they are processed. By detecting suspicious scenarios and examining behavioral patterns, CheckFree continually updates its business rules with real-time intelligence that identifies new types of fraudulent activity. Both consumer behaviors and merchant transaction activities are analyzed.
In fiscal 2006, CheckFree processed 1.13 billion transactions and distributed 184.6 million electronic bills. Fraud rates for CheckFree's electronic billing and payment services historically have been extremely low due to stringent policies and practices already in place. CheckFree FraudNet is proving extremely effective at flagging possible fraudulent transactions through automated fraud prevention, detection and case resolution processes that have been conducted successfully for many years by CheckFree Fraud Control Services. As continued adoption of electronic billing and payment results in increasing transaction volumes, CheckFree automated these processes to monitor and stop fraudulent transactions before they are completed.
In addition to stringent security technologies and privacy policies in place, consumers may not be aware that financial services websites, and electronic transactions in particular, are subject to federal regulations designed to protect consumers. These include Federal Reserve Regulation E, the Uniform Commercial Code and The Internet False Identification Act of 2000.
According to a study released in January 2005 by Javelin Strategy & Research, identity theft and identity fraud are more frequently committed using traditional methods -- a lost or stolen wallet, access to account information from paper mail and trash -- and are more frequently perpetrated by people the victims know than by strangers who hack Internet sites. The best ways consumers can protect themselves are illustrated by a quiz and tips at a site hosted by the Better Business Bureau -- http://www.idsafety.net.
In a recent survey reported by Aite Group, 67 percent of 12 top financial institutions identified fraud detection and transaction monitoring technology as the most important factor in making online banking even more secure over the next five years.
"No one is protecting your mailbox or trash can from thieves," Lewis said. "But CheckFree and financial institutions are stepping up to protect consumers from the threat of identity fraud by proactively monitoring and stopping unauthorized online transactions before they result in bank and consumer losses. We're also providing consumer's who bank at financial institutions that implement CheckFree FraudNet limited exposure to expenses related to fraudulent payments."
According to a January 2006 study released by Javelin Strategy & Research and the Better Business Bureau and sponsored by CheckFree, Wells Fargo Bank and Visa USA, 90 percent of unauthorized access to sensitive information occurs through non-electronic traditional channels, such as lost or stolen wallets, bills and statements. The median fraud amount remains at $750 per fraud victim. Overall, the annual amount of identity fraud was estimated at $56.6 billion, according to Javelin. The study recommends that consumers replace paper invoices, statements and checks, which can be stolen from unsecured locations such as mailboxes, with electronic versions and advises consumers to frequently monitor their financial accounts online to help prevent and detect identity theft.