Fraud in Cards III

AUTHORIZATION LEVEL TRANSACTION BLOCKING

 

Transaction blocking gives you the ability to prevent the authorization of all transactions originating from countries or merchants known to generate fraudulent transactions. By taking advantage of the ability to override blocks at the card level, you can maximize your protection without inconveniencing your cardholders who may be traveling or working outside the United States.

The benefits include more precise fraud detection and increased fee income as you no longer unnecessarily block international card present transactions. According to industry statistics these transactions are an issuer’s most profitable ones because the average value of an international card present transaction represents 175 basis points in value versus 16 basis points for a domestic transaction.

These tools provide a method of blocking transactions you consider highly likely to be fraudulent by routinely denying the transactions in the authorization process. Issuers often look to Visa or MasterCard to implement blocks for specific countries. The associations’ capabilities are adequate for blocking countries but they do not address other high-risk criteria such as merchant ID.
 

Issuers should take advantage of all available tools to mitigate risk. Transaction blocking capabilities are a key component of a sound risk management strategy and can be used to stop fraudulent transactions originating from specific countries, specific merchants and/or specific merchant types. Your transaction blocking approach should provide you with the ability to place transaction blocks at the BIN and individual card levels. This approach enables you to block transactions you deem high risk, at your discretion. Any combination of BIN and card level blocks should be set giving you the ability to override blocks for those specific cardholders who are traveling or working overseas. Blocking criteria should be set for all transactions or specific transactions —ATM, POS, eCommerce — within BIN and card levels.

You assign the expiration date of each block to ensure compliance with card association rules regarding international/country blocking. Approve/deny options for each block include report and continue, deny, and deny and capture card. Daily and monthly reporting is important and block-related information should be incorporated into online transaction review screens, making it easy to manage your blocking strategies. It is important to note that rules implemented for blocking transactions may only prevent the authorization of transactions through your processor’s switch. Any transactions authorized through Visa and MasterCard during stand-in may require additional steps to implement blocks on the associations’ systems. Additionally, blocking of transactions does not necessarily protect your chargeback rights.

NOW ADD COMPROMISED CARD TRACKING . . .

Industry trends indicate that blocking and reissuing cards each time a compromise occurs is not only expensive but also causes cardholder churn. Cardholders receiving reissued cards multiple times due to compromises, especially those that they may not have heard about in the news, frequently question the security of their issuing institution and a relatively high percentage will move their banking relationship to another institution. Although compromised cards are more likely to be used to conduct fraudulent transactions, taking this into account in the neural network process aids in stopping fraudulent transactions. Visa and MasterCard provide alerts to you or your sponsoring institution when a data breach or card compromise event involving card data occurs. Issuers historically have routinely blocked and reissued cards to prevent losses. Consider closely monitoring the activity on compromised cards and reissuing only those cards with suspicious or fraudulent transactions. Ensure your processor enables you to more closely scrutinize transactions for compromised cards in neural network processing. . . .

AND CASE TRACKING

A sensible case tracking tool will enable you to immediately serve any cardholder regarding cases that have been created or are being worked.

Case tracking tools put information online and at your fingertips so you have a complete repository of all actions taken on your cases and immediate access to updates and case statuses. Customized search options will enable you to view the information you need quickly and easily. With an appropriate case tracking tool, you have real-time access to information and can:
Search and download by case creation date, case status, card number, last name, tax ID, phone number, or city, state and postal code

Download and review available transactions associated with a specific case

Status cards and manage cardholder records optimizing back-office operations

Determine a case status (Fraud, No Fraud, Unconfirmed)

Directly enter actions or review actions already taken by your team, including:

•Send a letter to the cardholder

•Review case and cardholder demographic details

•Dynamically select data to generate a custom report or print records.

Case tracking is made especially efficient through the use of transaction tagging – a feature that provides enhanced visibility to potential fraud trends. With tagging, transaction details – including the merchant, country and state – are already verified when you review cases, significantly streamlining the research process, resulting in quicker identification of fraud and expedited implementation of fraud prevention solutions.