MasterCard releases account data compromise modelling tool

Source: MasterCard

MasterCard Worldwide is introducing the Expert Monitoring Compromised Account Service to issuing banks in every market throughout the world. This service represents the latest addition to MasterCard's suite of Expert Monitoring Solutions which provide turnkey, next-generation fraud detection and prevention capabilities that help issuers reduce their fraud-related costs.

Account Data Compromise (ADC) events threaten issuing banks with potentially sizable fraud losses, substantial re-issuance expense and cardholder attrition. MasterCard research shows that accounts exposed to an Account Data Compromise event are nearly three times more prone to fraud than non-exposed accounts. According to a 2010 Javelin Strategy and Research study, cardholders who receive a new card account as a result of an Account Data Compromise event often abandon the card or use it much less frequently. As a result, accounts exposed to Account Data Compromise events represent a significant yet unpredictable source of loss for issuing banks.

MasterCard developed the Expert Monitoring Compromised Account Service to provide issuing banks with a comprehensive, real-time view of Account Data Compromise fraud risk during authorization with an ADC Threat Score that predicts the likelihood that fraud will occur on accounts exposed to Account Data Compromise events. Using state-of-the-art data modeling techniques and leading-edge computing technology, the ADC Threat Score is calculated by evaluating the:

* transaction information for the exposed accounts,
* merchants at which the cards transacted,
* confirmed fraud on exposed accounts, and
* behavior of similar accounts with common Account Data Compromise exposures.

Using this information, the ADC Threat Score predicts the probability of fraud over the coming 7 to 14 days—helping issuers to determine when, or if, to close the exposed account and re-issue a new account number to the cardholder.

"We believe the Compromised Account Service represents the next generation in precise fraud prediction for issuing banks," said Wendy Murdock, Chief Payment System Integrity Officer, MasterCard Worldwide. "This is the first and only solution that provides a past, present and future view of Account Data Compromise fraud—leveraging intelligence from past Account Data Compromise events to prevent fraud on exposprevn exposprevent fraud on exposed accounts in the present during authorization and deliver a highly predictive future indication of fraud as a result of ADC exposure."

The Compromised Account Service helps issuers more effectively assess the threat of fraud on accounts exposed to Account Data Compromise events to reduce their fraud losses, lower their re-issuance costs and minimize cardholder dissatisfaction. MasterCard analyzed a major U.S. issuing bank's exposure to prior Account Data Compromise events as well as its transaction and fraud activity from April to September 2010. MasterCard identified significant fraud losses and re-issuance costs the bank would have avoided using the Compromised Account Service. The analysis revealed that by taking action on accounts with the highest ADC Threat Scores, the issuer would have prevented over 25 percent of the compromised account fraud by closing just 5 percent of the exposed accounts.

About MasterCard Expert Monitoring Solutions

With MasterCard's full suite of fraud prevention and detection products and services, issuing banks benefit from:

* A global and comprehensive view of fraud patterns and transaction trends
* Precise network fraud models, as well as custom models based on the unique characteristics of specific portfolios, that deliver superior fraud transaction detection rates
* Highly predictive fraud scores delivered in real-time on every transaction authorization request that traverses the MasterCard network
* Scalability to score larger volumes of transactions in a highly targeted manner based on multiple account attributes
* Low rate of fraud transaction false positives which helps issuers ensure cardholder satisfaction
* Timely, predictive compromised account management with an aggregated threat score across multiple compromise events for each account
* A hosted solution that complements issuer fraud detection systems to reduce the total cost of ownership for predictive fraud modeling capabilities.

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