ST. PETERSBURG, Fla.—PSCU said its efforts to detect and prevent payment card fraud on behalf of its 800-plus member-owner credit unions has yielded a fraud loss savings to those credit unions of more than $100 million in declined fraud transactions over the past 12 months.
In addition, PSCU reported that its use of custom fraud detection strategies, analytics and proactive account tagging and monitoring has delivered a fraud-to-sales loss ratio of 6.25 basis points (or $0.0625 fraud per $100 in sales) over that same period, significantly lower than reported industry averages of between 11 and 14 basis points, the company said.
The company pointed to recent CUNA estimates that expenses from card reissuance and fraud totaled $87.4 million between the Target and Home Depot breaches, which affected 7.2 million credit union credit and debit cards.
"Our credit unions understand their need to identify the fraud mitigation response that makes the most sense for them and their members," said Steve Ruwe, PSCU's chief risk officer. "A pool of accounts reported to be potentially compromised in a data breach does not necessarily mandate that those cards be blocked and reissued. Fraud analytics together with a 'tag and monitor' strategy can provide effective fraud prevention without the need for a costly card reissue."
PSCU said it was quick to tag and monitor accounts when the Target and The Home Depot data breaches were publicly announced, even before the card brands had issued their compromise alerts bulletins to processors and issuers. "There are situations where reissue is the recommended response, but in the absence of significant fraud in a particular credit union's overall portfolio, account tagging and monitoring can help credit unions keep reissue costs down and spare cardholders the inconvenience that goes with replacing their cards," said Ruwe.
This approach has allowed PSCU credit unions to weather both the Target and Home Depot breaches and experience lower levels of fraud than the payments industry at large, the company reported.
PSCU added that it maintains two years' worth of transactional history in its fraud analytics database, which feeds into its fraud detection platform to score each credit and debit transaction for the likelihood of fraud. "The depth of our transaction database helps identify legitimate cardholder behavior patterns, and the custom fraud detection strategies enable PSCU to maintain a low false positive ratio," said Ruwe.
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