Text Alerts For Credit Card Fraud

Source: 160characters.org

A fraud detection solution for banks to quickly alert customers to potential misuse of their credit card has been launched by MasterCard and mBlox. The SMS based solution could cut response times by up to 90% and reduce operational costs for banks by 20 – 30%

The deal between MasterCard and mBlox is a worldwide cooperation agreement to integrate mBlox’s mobile messaging service with Aristion, MasterCard’s fraud prevention tool. The new service is a simple upgrade for existing Aristion users who can install it in under an hour.
Fraud Alert
Currently most banks still rely on manual processes to resolve queries about high risk transactions. Using the MasterCard and mBlox solution, banks will be able to offer their customers a service that they can use after a simple registration process.

In the case where a high risk transaction (such as one that matches a known fraud pattern or which deviated from the cardholder’s normal pattern) is identified, bank customers will immediately receive an SMS to verify their transaction.

If the card holder is aware of the purchase, they need take no further action. If this is not a transaction they have authorised they can immediately call the freephone number contained in the message to alert their bank. At the begining of Q4 2005 version two of the system will enable two way SMS so that the customer can also reply by SMS.
Too Many Calls
Traditionally banks have relied on call centres to handle this task, but this is an expensive operation with twenty to thirty calls required to detect one fraud. Even though a well trained analyst can handle up to 100 calls per day, there is often a significant waiting time between the moment the transaction is identified and the customer is contacted. Naturally any delays in making the call or responding to the initial call increase the risk of multiple frauds on the account or on the card.

Using MasterCard’s SMS application and mBlox’s worldwide connectivity, more customers can be reached more rapidly and reliably at a lower cost.

MasterCard estimates its SMS-based solution will enable banks to send up to 10 SMS messages for every telephone call placed to verify credit card transactions. If the consumer believes a fraudulent transaction has been committed, the bank can be notified to block further activity. This speed of response means cards can be blocked in a matter of minutes, reducing the number of fraudulent transactions and the impact for the bank. Furthermore, sending such alerts also frees up time for call centre staff, who will be able to deal with other urgent requests.

The system enables the bank to write rules which will automatically trigger an SMS to ask the card holder for verification. The Aristion message editor allows messages to be constructed dynamically according to the rules created by the bank and messages can be customised according to the bank’s requirements.

“MasterCard is determined to work with its banking customers to improve the detection of credit card fraud and ensure consumers enjoy an increasingly secure banking experience," said Johan Gerber, Associate Vice President, Risk Products at MasterCard. "This system enables the card holder to become involved in fraud prevention in a safe and non-intrusive way" said Gerber.
Permission Based
“mBlox has always believed that SMS is a very powerful tool for financial institutions, and we built our global, carrier-grade infrastructure to meet this high standard,” said Andrew Bud Executive Chairman of mBlox. "Banks are very conservative" said Bud "and our association with MasterCard should give them the confidence they need."

"Customers are more willing to give their mobile number to their bank than they are to give their bankl details to their phone operator" said Bud "especially when they see real value in exchange. Customers are much more aware of security issues and we anticipate rapid take up of this from both banks and their customers" said Bud.

Unlike any other SMS-based solution, its pre-defined connections to the mBlox mobile infrastructure means the bank does not have to integrate its fraud systems with individual mobile operators or service providers. It also means banks around the world receive access to preferred SMS rates as well as Service Level Agreements to ensure the reliability and speed of service delivery.

"If there are network delays or the text message cannot be delivered because the hadnset is turned off, we feed this information back so that the bank can immediately contact the customer via alternative means" said Bud.
World Wide Service
MasterCard has launched this service globally and is concentrating initial efforts in Europe because of the highly saturated mobile services marketplace. Throughout 2005, MasterCard will be extending the service to Asia Pacific, SAMEA and later to North America. The product should start to impact consumers in the latter half of 2005.

“Credit card fraud remains a top priority for banks around the world and any technology innovation that addresses this challenge is welcomed,” said Phil Curtis, from Lloyds TSB, Chairman of MasterCard UK Members Forum Ltd’s Security Committee.