A good prevention and mitigation strategy leverages process, technology and human expertise. By John Winstel Sponsored by Vantiv 
Fraud hurts consumers and merchants alike, but cardholders put an even greater level of trust in their financial institution to protect them and resolve any negative consequences associated with fraud. In fact, an Accenture survey reports that 74 percent of respondents expect fraud protection from their financial institutions. The impact of fraud on financial institutions goes far beyond the concrete dollars and cents and into the even more nebulous and sensitive area of consumer trust. Fighting fraud requires managers to have as much information as possible so they can aggressively identify problems and take steps to mitigate them. A good payments partner can be invaluable in providing information about fraud type (card present, card not present), the point-of-purchase transaction and the cardholder. This information can help formulate a solid fraud prevention strategy by leveraging processes, technology, and human expertise. Prevention Processes Making sure your fraud strategies include streamlined and highly effective processes is the first step toward reliable fraud mitigation. These processes should include, at a minimum, chargeback processing services for every point in the process, management of signature debit disputes, dispute collection from cardholders, and automated reporting of confirmed fraud to the card networks. Technology Resources The technology solutions available today for fighting fraud are impressive. A combination of automated systems and big data aggregators is making fraud mitigation more aggressive than ever. Institutions should be able to employ adaptive fraud detection models that learn cardholder purchasing behaviors and identify abnormal card usage. So, if a cardholder’s buying behavior doesn’t match his typical usage, the system will raise a red flag and the transaction will be blocked. With this information, fraud strategies can be implemented to stop fraud at the point of sale, while still achieving a high approval rate on non-fraudulent transactions. As large and technologically advanced as the card brands are, they don’t always catch and report every compromise. Using a service that generates additional card compromise alerts and proactively sends notifications to financial institutions is another good strategy to have in place. Human Expertise While a solid fraud mitigation strategy is largely automated and technology driven, there’s no doubt that the people behind the processes bring a sizable advantage to any strategy. Having a fraud expert in between the processor software and a decision alert to interpret data limits the number of alerts to cardholders, while increasing the fraud detection ratio. The personal human touch is the glue that holds the data, technology, and processes together for exceptional fraud mitigation results. John Winstel is product manager for Vantiv, Dallas. Read a previous post by Vantiv, "Enlist Cardholders in the Fight Against Fraud." You may be interested in attending CUES School of IT Leadership, slated for Sept. 27-29 in Charleston, S.C. You may also be interested in attending Strategic Innovation Institute I, slated for Sept. 25-30 at MIT.
