Little Shazam€¦ · number to report fraud or lost/stolen cards Proprietary & Confidential....

10/9/2017

1

Power Up Your Fraud Mitigation PotentialIowa Bankers Association 2017 Technology Conference

Liz Little SHAZAM Fraud Consultant

October 24, 2017

Proprietary & Confidential. ©2016 SHAZAM, Inc. Information is of general applicability and current as of date of presentation.

Agenda

Fraud statistics Fraud trends Compromised cards Tools to prevent or reduce fraud losses Best practice reminders


Fraud statistics

$0.00

$500,000,000.00

$1,000,000,000.00

$1,500,000,000.00

$2,000,000,000.00

$2,500,000,000.00

$3,000,000,000.00

$3,500,000,000.00

$4,000,000,000.00

$4,500,000,000.00

Lost Stolen NRI Fraud App Counterfeit AcctTakeover

CNP

US Worldwide

Fraud Statistics 2016 — VISA®

10/9/2017

2


Fraud statistics

Fraud Statistics 2016 — MasterCard®

$0.00

$200,000,000.00

$400,000,000.00

$600,000,000.00

$800,000,000.00

$1,000,000,000.00

$1,200,000,000.00

$1,400,000,000.00

$1,600,000,000.00

$1,800,000,000.00

Lost Stolen NRI Fraud App Counterfeit AcctTakeover

CNP

US Worldwide


Fraud trends

• Skimming• Keyed card present• Phishing• EMV Fallback


Skimming

• ATM• Pay at Pump• POS Overlay

10/9/2017

3


Does this look suspicious?


ATM skimming

Regularly check terminals multiple times daily

Look for signs of tampering

• Adhesive residue• Skimmer devices


ATM skimming

Monitor outages Video

• View daily• Position correctly

Notify law enforcement if skimming is detected

10/9/2017

4


Skimming and EMV liability shift

Liability Shift Date Extended• U.S. AFD (Automated Fuel

Dispenser) terminalso October 2020

ATMs• MasterCard October 2016• Visa October 2017


POS overlay skimming

Fraudster distracts merchant Applies overlay Gains card information

10/9/2017

5


Shimming


Keyed card present

Card is present Transaction is key-entered No PIN used May not meet counterfeit

card (swiped) rules Rules can be set to decline


Phishing

Increase in attempts to gain information

PIN CVV2 CVC2

10/9/2017

6


Phishing

Social engineering

Microsoft® scam

Results in PIN-based

Internet fraud

FI scam

Using EMV reissuance as part of scam

IRS scam

During tax time


EMV fallback fraud

Magnetic stripe compromised

Applied to Chip card stock

How to identify

• POS Entry Mode = 80 or 90 (magnetic stripe read)

• Service Code = 2 (indicates Chip card)• Terminal Capability Code = 5 (merchant is

chip enabled)


EMV fallback fraud

10/9/2017

7


EMV fallback fraud

• Loss to issuer

Liability shift does not apply

Need effective Fallback decline rules to combat


What to do when you see a fraud trend

Three or more PANs with similar fraud

Is it being caught by fraud detection system?• If not, may need new

rules or blocks


What to do when you see a fraud trend

Utilize blocking tools for specific activity

Check past compromised card notices

Run queries to try and identify CPP• Common Point of

Purchase• Identify other cards at risk

10/9/2017

8

Compromised cards


MasterCard

ADC-1234-US-17• Account data compromise• Sequential alert number — 4 digit• Region in which compromise occurred• Last two digits of year• May designate sequential alerts

o ADC-1234-US-17-2


Visa

US-2017-1234-PA• Region and year in which

compromise occurred• Sequential alert number — 4 digits• Type of alert

o PA — proactive alerto IC — Internet compromise

• May designate sequential alertso US-2017-1234-PA-2

10/9/2017

9


Compromised card reimbursements

May receive reimbursements for qualified events

May receive offer to accept an additional recovery amount (ARO)• Accepting additional offer may waive right to join

class action suits

• Effective 10/14/17 – Visa will include CNP events and eliminate reimbursement for magnetic stripe only cards


Best practices

Download files and save with alert number

Cross reference merchant name, if

known

Keep as handy reference if

needed later

Note action taken on each PAN, or

group with similar action


Best practices continued

Create special rules

Track 2 Card Not Present

Track 2 & PIN

10/9/2017

10


Handling options

Hot card and reissue• Call cardholder and

advise• Hot card or use

temporary block• Could allow cards

nearing expiration to reissue naturally


Handling options continued

Force reissue• Risk until new card is received

by cardholder and activated• Cardholder can keep same PAN

and PIN• Expiration date and security

values change so card is no longer at risk with old data


Handling options

Transaction control & blocking• Cardholder can use service to

block card unless they are going to use ito Can prevent fraud, if used

correctly Transaction alert

• Notifies cardholder when card is being used

Lower daily limits Fraud monitoring

10/9/2017

11


Risk and exposure

What data is at risk? What is window of exposure?

Track 1 and 2 puts card at risk for card present

counterfeit fraud

Card Not Present –PAN, expiration date,

CVV2, CVC2

Check window of exposure

• No chargeback rights• Unless EMV liability shift

• Risk for Internet or MO/TO fraud

• Potential chargeback rights

• Determine if PAN on list has reissued after end date


Risk and Exposure

Data Breaches and EMV

If merchant is NOT EMV, magnetic stripe is at risk If merchant is EMV, but plastic is not, magnetic stripe

at risk*

If merchant AND plastic are EMV, only CNP data at risk* Account number and expiration date only

*Kmart, Buckle

Tools to prevent or reduce fraud

10/9/2017

12


Fraud monitoring tool

24/7 review

Decline/Create cases for

suspicious activity

Temporarily block if

cardholder cannot be reached

Ability to create custom rules


Fraud Rules

Rules Counterfeit fraud Card present swiped EMV Fallback Card present/key entered Specific trends

Card Not Present fraud Testing Specific trends

Compromised Cards Track data Track data and PIN Card Not Present data


Alerts and controls

Transaction alerting & Blocking Dollar amount Internet International

Suspicious activity alerts Transaction control

If alert received that is fraud, cardholder can immediately block

Cardholder can proactively block card until they want to use

Success Story!

10/9/2017

13


Blocking

Transaction blocking options

State/MCC (Merchant Category

Code)

State/MCC/Dollar

amountCountries MCC’s


EMV

What is EMV?• Chip technology used for Card Present transactions• Meant to reduce counterfeit card fraud


EMV issuance

10/9/2017

14


EMV


EMV


Other tools

Daily Limits Keep low, but manageable

Mobile payment devices Apple Pay® Samsung Pay® Android Pay Microsoft® Wallet

Reports

TM

10/9/2017

15


Best practice reminders

Use on-hold time and website for cardholder education

Take advantage of anti-fraud marketing materials

Keep daily limits low, but manageable Make sure after-hours recordings provide a 24/7

number to report fraud or lost/stolen cards


Best practice reminders

Establish or join local fraud group• Including law enforcement

community• Networking and information

sharing Designate an after-hours

fraud contact Educate cardholders to use

PIN when possible to avoid inconvenience

Thank You!QUESTIONS?

Little Shazam€¦ · number to report fraud or lost/stolen cards Proprietary & Confidential....

Documents

Transcript of Little Shazam€¦ · number to report fraud or lost/stolen cards Proprietary & Confidential....