ST. PETERSBURG, Fla.–Fraud related to card rewards redemption is just the latest area to be targeted by scammers, and in response PSCU reported it has deployed new technology to protect CU members.
“The platform uses an advanced authentication process to validate all entities in the points redemption loop–the device, the member and the redemption transaction,” PSCU said. “The CUSO’s tool detects suspicious activity through digital risk-engine rules that block and eliminate: blacklisted devices, inconsistent location indicators, suspect form-filling behaviors, and multiple redemptions under different identities from a single device.”
PSCU said the tool was instrumental in reducing loyalty fraud in 11 attempts (1.2 million in points value) during its pilot phase of implementation.
“Our success in protecting our owners and their members from the potential financial and reputational damage from fraud validates our continued commitment to investing in the strongest risk management practices and tools available,” said Jack Lynch, PSCU SVP and chief risk officer. “Our fraud mitigation success metrics are a testament to the quality of the people, processes and technology we deploy every day to optimize our Owners’ business performance,” Lynch added.
Additionally, as CUToday.info recently reported, PSCU has also adopted a platform from Pindrop to mitigate caller authentication fraud, another emerging type of fraud that targets the technology and human components of call centers.
“The partnership with Pindrop enables PSCU to give its Owners increased peace of mind by identifying fraud attempts early on, which reduces costs associated with the fraud lifecycle,” added Lynch. “We will also be able to streamline the member’s authentication experience to enable faster issue resolution time through the voice channel.”
In 2016, PSCU said analyzed and scored 2.1 billion individual transactions for the presence of fraud and investigated 1.7 million transactions based on alerts generated by its fraud detection platform.
The company further reported savings to its member credit unions of more than $300 million in losses in 2015 and 2016 by nullifying fraudulent transactions directly at the point of attempt.
PSCU said it blocked $146 million in fraudulent transactions at the point-of-sale in 2016 while also reaching the 11 million mark for EMV debit and credit cards issued to address card-present fraud. Since the October 1, 2015 liability shift, PSCU has charged back more than $7.5 million to merchants who have yet to comply with EMV requirements. The company’s net fraud-to-sales ratio of $0.075 per $100.00 in credit card sales easily outperforms the industry average of $0.140. Similarly, the loss ratio of $0.050 for debit cards easily beats the industry average of $0.080.
According to Lynch, PSCU processed 365,000 fraud cases in loss recovery efforts in 2016 for its owner credit unions. For credit, PSCU recovered 59% of fraud losses versus 30% for the industry; for debit, the recovery rates for PSCU versus the industry were 68% and 40%, respectively.