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Combat Fraud by Putting Cardholders in the Middle – A Success Story

Combat Fraud by Putting Cardholders in the Middle – A Success Story
Posted: Jul 22, 2016
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A follow up to previous TPR article on this topic

Fraud continues to be the number one reason why a cardholder moves a card from top of wallet. And fraud isn’t cheap, costing the issuer in liability for the fraudulent charges plus the cost of reissue. Additionally, there is the potential of lost revenue from the card being moved from the number one position in the cardholder’s wallet.

A previous thought leadership article on ThePaymentsReview.com introduced the concept of putting the cardholder in the middle of the transaction, meaning enlist the cardholder to take ownership of monitoring card purchases and respond quickly to potential fraud.       

A shining example of success implementing this strategy took place over the 4th of July weekend. FIS, CSCU’s processing partner and international provider of financial services technology and outsourcing services, rolled out a new product called, SecurLOCK Communicate.  The product alerts credit and debit cardholders of potential fraud in real time via a two-way interactive text message (SMS), or a voice call, or an email.

Cardholders who have a mobile phone number on file with their issuer and had a suspicious transaction received a text message in under 30 seconds on average of the transaction being flagged by a neural network, asking the cardholder to validate the recent transactions, or to confirm the suspected transactions as fraud. A whopping 54% of the text messages were responded to in real-time, showing the cardholder appreciates this level of monitoring and control. This is even higher than the Beta group’s 48% response rate – which was already better than expected.

Eliminates embarrassing card blocks

The benefit of confirming the transaction as valid eliminates embarrassing and inconvenient card blocks. The benefit of confirming fraudulent activity immediately helps prevent further activity. It’s been proven that catching and reporting a fraudulent transaction within 30 seconds can prevent previously unrecoverable losses by 70%, by shutting down the counterfeit card immediately.

Users who did not respond to the text message, or who indicated the transaction may be fraudulent received an automated phone call, with the option to speak to a live agent. An even better than expected 55% of these voice alerts were responded to, further decreasing fraudulent activity. And this was just in the first weekend of the product, with many cardholders not yet having seen communication about the new service.

Finally, cardholders who did not respond to text or voice, or did not have a reachable phone number, received an email, with links to respond to validate the transaction or indicate fraud. And despite all the spam and junk mail that floods most inboxes, 42% of the emails were responded to, up from an initial email response rate of 32%. This is especially phenomenal, given that the median click rate for a typical email campaign is 6.5%.

These numbers will only grow over time, as more cardholders learn from their issuers the importance of being in the middle of the transaction, and the benefit of fighting fraud by reacting quickly.

Use this member-facing message

We encourage all credit unions to incorporate this member-facing message, which will be seen on statements, on your website, newsletter, on-hold messaging, etc.

“New Fraud Protections Coming This Summer! To further protect you, you will begin receiving texts and/or emails asking you to confirm if suspicious purchases are valid or not. We will ONLY ask you to verify if you did make the purchase(s) or not, we will not ask for account or personal information. Keeping you protected is important to us and we are excited to offer these new enhanced fraud services to you!”

Click here to download a page of FAQs that you can provide your members.




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Dean Knudtson

Dean KnudtsonDean Knudtson

Dean has been in the financial services business for close to 30 years, after starting his career at Seattle Trust and Savings and then Western States Bankcard Association where he was regional vice president for the Pacific Northwest and Northern California.

Other posts by Dean Knudtson

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