Fraud Attack Manager

Fraud Attack Manager Helps Mitigate Loss Exposure From a Fraud Attack on New Credit Cards

Bad-Good Multiplier

a calculation showing the relationship between a segments contribution to the bad population compared to it’s contribution to the good population. A segment with a Multiplier of 1.0 contributes proportionally to the bad population and the good population. The larger the Multiplier the greater the segment contributes disproportionately to the bad population.

First Payment Default

accounts that do not make their first contractual payment on time. Accounts are typically considered FPDs once they reach 30 days past due from the first payment date.

Background

A national bank partners with retailers to provide private label credit cards to their customers. Customers can apply at the point-of-sale in the store, online before shopping or during checkout, or over the phone. The bank’s Fraud Director observes a spike in first payment defaults (FPDs) on newly issued cards from several retail partners. The utilization on these FPDs is near 100% and since first payment dates are 45-60 days after the customer is approved, the Fraud Director is concerned these new FPDs are the early signs of a fraud attack which could result in huge unexpected losses.

The Process

The bank transfers a account-level data file with no PII data included. When the data arrives it automatically triggers Fraud Attack Manager.

Within seconds results are provided showing non- FPD distributions and FPD distributions for every characteristic and segmentation provided.
Results are ranked based on a Bad-Good Multiplier and also show cumulative distributions, making it extremely easy for the Fraud Director to identify which characteristics and segments are missing the proper controls to protect against this fraud attack and driving the FPD spike.

Results

Using results from Fraud Attack Manager the Fraud Director is able to complete the following:

Flag new applications matching characteristics and segments that represent a large percentage of the FPDs, but only a small percentage of the non-FPDs, and routing these to a specialized fraud team for review. This mitigates the loss exposure with minimal impact to the overall customer experience while a comprehensive root cause analysis is completed and preventative controls are developed.
Identify characteristics and segments with large Bad-Good Multipliers so she can have her team evaluate similar accounts that have yet to reach their first due date and estimate the bank’s current risk exposure to this attack
Quickly update the Executive team on the size of the attack, actions taken to mitigate loss exposure and the analysis in process to resolve the issue
Provide details of the higher risk characteristics and segments to give the analyst a head start on her root cause analysis

Optimization Benefits

“Reduce losses from fraud attacks by 50% with Fraud Attack Manager by immediately isolating and managing compromised segments until new controls can be implemented.”

Eliminate chaotic fire drills that send your staff scrambling for answers and create more concerns as pieces of information trickle in. Fraud Attack Manager allows you to ring-fence the problem and begin resolution without disrupting your entire business.