Fraud Detection in Banking

Topics: Identity theft, Debit card, Fraud Pages: 24 (6799 words) Published: January 10, 2013
A First Data White Paper

Now You See It, Now You Don’t: A Review of Fraud Costs and Trends Fraud is more dangerous to your business than you think, and treating it as a cost of doing business may be emboldening criminals and costing you customers. A well-designed fraud management program can help protect your customers and improve profitability. By Krista Tedder Product Owner, Risk Management and Fraud Solutions

© 2009 First Data Corporation. All trademarks, service marks and trade names referenced in this material are the property of their respective owners.

Now You See It, Now You Don’t: A Review of Fraud Costs and Trends

A First Data White Paper

Introduction: Is Fraud the Perfect Crime?
The very best crime, or the very worst, depending on your point of view, is the crime that goes unnoticed. Imagine this: Today is your big day, and you are about to finalize an important contract. To seal the deal, you treat your customers to a fine lunch at a very special restaurant. You have an excellent meal during which you build on your relationship with your customers. When it comes time to pay the bill, you reach for your wallet. It’s not there! How embarrassing is that? You are mortified as your customers watch you frantically search your pockets. Where could you possibly have lost your wallet? Of course, by the time you recall that someone bumped against you in the crowded lobby, your cash is gone, your cards are maxed out and the thief has vanished. Now, imagine this same business luncheon once again. After a very successful meeting, you announce you’ll take the bill as you hand your debit card to the waiter. Moments later he returns and whispers that the card has been declined. How can this be? You have not used this card recently, and your paycheck was just deposited. You check—your card has not left your wallet. No one would have your PIN, would they? As your mind races to figure out what’s going on, one of your business associates asks, “Is there a problem?” You smile nervously and say, “No. No problem.” No problem indeed! In today’s wired world, criminals are getting smarter. They no longer need to steal wallets to get your money. Instead, they infiltrate computer networks, watching for a weakness in security, waiting for a chance to steal information. They “phish” by sending bogus, yet seemingly credible e-mail messages asking unsuspecting victims for personal information. They tamper with credit and debit card readers to capture PIN and account numbers for counterfeit cards. These thieves are modern-day pickpockets, leaving the scene before anyone realizes they’ve been robbed, escaping prosecution and looking for the next big opportunity. Unfortunately, unlike the one-on-one offense committed by traditional pickpockets, these cyber criminals strike on a much larger institutional scale, affecting millions of people in one fell swoop and costing businesses billions of dollars.

© 2009 First Data Corporation. All rights reserved.

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Now You See It, Now You Don’t: A Review of Fraud Costs and Trends

A First Data White Paper

In fact, the Identity Theft Assistance Center (ITAC) says that security breaches are up 47 percent since 2004, with damages due to cybercrime costing approximately $100 billion annually and expected to increase1. A consumer Web site that tracks and posts security breaches,, reports that in the last five years, approximately 500 million records containing personal identifying information of U.S. residents stored in government and corporate databases were either lost or stolen2. Cybercrime, security breaches, identity theft and just plain fraud are crimes of opportunity. The ubiquity of electronic payment transactions and the emergence of a global e-commerce economy offer criminals lots of opportunity to perpetrate fraud. Many criminals are emboldened by the anonymity of their actions, by businesses’ failure to recognize the many...
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