Fraud Machine Learning - FIS Globalempower1.fisglobal.com/rs/650-KGE-239/images/1228_Fraud...
Transcript of Fraud Machine Learning - FIS Globalempower1.fisglobal.com/rs/650-KGE-239/images/1228_Fraud...
May 2017Scott Bright, VP Fraud Product Strategy
Fraud Machine LearningA digital arms race that holds security in the balance
Session Agenda
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• What is Artificial Intelligence Machine Learning?
• Technology used by criminals
• Why does the payment industry care?
• Strategy and tools in the market to combat fraud
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What is Artificial Intelligence
Machine Learning?
Machine LearningEvolution of Machine Learning Approaches
• Statistical algorithms use mathematical probability to predict outcomes
• Classical statistics-based solutions can’t improve performance over time
• Cognitive processes model human thinking to solve problems
– Heuristic rules
– Inductive logic
Cognitive models can improve if new rules are added manually
• Machine learning is a class of computer algorithms that improve their performance by learning from positive examples.
– The algorithm is trained with specific examples with known solutions
– The algorithm then predicts answers from unknown datasets
Machine Learning Algorithms:
Classification Techniques
Clustering is the task of grouping a set of objects in such a
way that objects in the same group (called a cluster) are more
similar to each other
AI Neural Networks Approach:
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Neural Networks are a family of models inspired by biological neural networks (the central nervous
systems of animals, in particular the brain) and are used to estimate or approximate functions that can
depend on a large number of inputs and are generally unknown.
Benefits
• Highly abstract data
representations
• Adaptive, rapidly
improving
performance
• No need for
interpretability
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Technology used by
criminals
Available 24/7/365 to anyone
The Big Business of FraudFraud as a Service
Who is involved:
• Organized crime syndicates
• Foreign governments
• U.S. Domestic crime rings
• Individuals accessing the Dark Web
How the Dark Side Runs Their Business
• Criminal enterprises with corporate structures:
– Profit/loss margins
– Criminal business strategies
– Targeted objectives
– Leveraged with other enterprises
• Criminal factions don’t want just the card:
– Database-driven
– Cardholder demographics
– Exploit data for maximum penetration
– Use malware to steal data where appropriate
• Use and take advantage of consumer spending patterns:
– Fraud trends mirror everyday spend categories.
– “Shock and awe” fraud is occasional rather than the norm.
– Use high-profile goods to convert to a cash equivalency (i.e., gas, gift cards,
cigarettes, etc.)
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Why does the payment
industry care?
Data breaches on the rise
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• Data Breaches increased by 40% in 2016
• All time record high with 15.4 million victims
affected
• Business sector topped the list with 45.2%
overall
• Healthcare 2nd with 377 reported breaches or
34.5%
http://www.prnewswire.com/news-releases/data-breaches-increase-40-percent-in-2016-finds-new-report-from-identity-theft-resource-center-and-cyberscout-
300393208.html
Industry Sectors Percentage of Overall Breaches
Cybercriminals have better toys
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• Shimmer devices used on ATM and card
readers
• Fraudulent online purchases made in groups
of small purchases to go undetected
• New technology created for fraudsters that
span across all business markets that never
used fraud mitigation tools
Source: http://www.pymnts.com/news/security-and-risk/2017/hacker-tracker-shimmers-identity-fraud-and-hacked-hotels/
Source: White Ops
Fraud losses hit right in the bottom…line
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• By 2020, card fraud worldwide is
expected to total $31.67 Billion
• Fraud losses are expected to grow
annually 12% in 2017 & 2018
• Account takeover losses in 2016
reached $2.3B a 61% increase from
last year
Data sources from: Neustar, The Nilson Report, ThreatMetrix
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Centralize Fraud
Management
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New Account Fraud Account Takeover Payments Fraud
Authentication Data AnalysisPost TransactionConsumer
Engagement
Transaction
Monitoring
ID Verification
Biometrics
OFAC
Device Authentication
Consumer ControlsTransaction Monitoring
Machine Learning
Business Intelligence
Predictive AnalyticsTransaction WarrantyCompromised Cards
Dedicated Analyst
Custom Rules
Global Rules
2-way Messaging
Fraud Mitigation
AssociationsTravel
Notification
Attack Types
Solutions in the Market
CAMS Alerts
Mitigation Categories
Malware Detection
Internal Fraud
Employee Fraud
Detection
Automated Chargeback
Dynamic Jailbreak Root Detection
ANI Spoofing
Fraud Solutions LandscapeAs the complexity of payments increases so does the demand for new fraud solutions
Enterprise Strategy for Omni-Channel Protection
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Leverage each channel’s unique processing to create a holistic view to fraud mitigation
• Fraud strategy across
multiple product lines
including credit, debit,
prepaid, & merchant
• Create a forum to allow
various fraud analyst
groups to talk and share
• Identify gaps in business
lines to start the solution
process
• Combine various fraud
roadmaps to drive into a
single through line
Fraud in Payments Breakout SessionsAdditional sessions to attend related to payments fraud mitigation
Application Fraud: The reemergence of an old tactic with a
new approach
Wednesday 2:00 – 3:00pm & 3:30-4:30pm
Room: Tampa 2
The Looming Account Takeover Threat
Tuesday 1:45 – 2:45pm
Room: Sun 4
Fraud Analytics and how to Harness the data
Tuesday 3:15 – 4:15pm
Room: Tampa 2
Consumer engagement: A Cardholder’s New Role to Stop
Fraud and Save You Money
Thursday 9:45 – 10:45am
Room: Tampa 2
Fraud Machine Learning: A Digital Arms Race that Holds
security in the balance
Tuesday 3:15 – 4:15pm
Room: Sun 6
Kiosk 308AStop by to learn more in
the Expo Hall
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One last thought…
“If you don't like change, you're going to like
irrelevance even less.”
-- General Eric Shinseki, Chief of Staff, U.S. Army
The fraud movement continues to morph into an industry with untraditional competitors
changing the traditional business models and technology
Together, with FIS we can lead the payments market so regardless of size – can
effectively compete against fraud
Create a strategy through leadership of defining and leading sustainable change within
how fraud is mitigated
This focus on fraud is critical for our success and the industry
We will not have a second chance, the time is now
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