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PRISM® : Intelligent Fraud Monitoring
<Customer Logo> <date> PRISM® : Intelligent Fraud Monitoring Presentation to <Customer Name> <name> <title> Retail Decisions, Inc
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Why would I buy it from ReD?
Agenda What is PRISM? Why do I need it? How does it work? What are the Benefits? Why would I buy it from ReD?
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What is PRISM PRISM is a software solution or hosted service to financial institutions, processors and switches for prevent payment fraud prevention ReD protects transactions in Real Time (RT) or Near Real Time (NRT) and works against any acceptance channel The PRISM Product Suite combines: Complex Business Rules Engine with full business user control Custom trained Neural networks Alert Case Management Workflow Monitoring and Reporting Analytics products for strategy development CPP/POC detection Retail Decisions, Inc – Confidential & Proprietary
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Where does PRISM Fit? Issuer Acquirer Merchant Cardholder
Acquirer Sends Auth request (via Networks) to Issuing Bank Issuer Acquirer Authorization Response Generated and Sent by Issuer Merchant Sends Authorization Request to Acquirer Acquirer sends response to Merchant Statement and Billing Payment or Chargeback Consumer Notified Purchase Complete Consumer Shops and Makes Purchase Merchant Cardholder Retail Decisions, Inc – Confidential & Proprietary
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PRISM – Complete Solution
Rule based systems Focus on what we know about fraud control Known fraud schemes can be prevented easily with rules Challenges If the rules are too tight … we catch nothing If the rules are too loose … we drown in reviews Rules don’t adapt to evolving fraud patterns Statistical solutions Focus on understanding fraud Fraud trend analysis Helps create complex rules for fraud detection Not a “dynamic” solution … doesn’t keep pace with changing schemes Neural Networks Focus on what we don’t know about fraud Earliness of detection Easy control of caseload vs false positive rates vs percentage detection Increased fraud savings
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PRISM® Products PRISM Real Time PRISM Credit and Debit PRISM Merchant
Real-Time Transaction Decisioning PRISM Credit and Debit Credit and Debit Card Fraud Detection PRISM Merchant Merchant Risk Management PRISM AML Anti Money Laundering PRISM RulesPlus Intelligent Rule Development and Testing PRISM PinPoint Point of Compromise detection ReD Shield Real-time CNP fraud prevention
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Why do I need it? CCN Credit Card Numbers SSN
Social Security Numbers (or Non-US Equivalent) NAA Names and/or Addresses EMA Addresses MISC Miscellaneous MED Medical ACC Account Information (Financial) DOB Date of Birth FIN Financial Information
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The Problem Changed – Organization and Speed
The scheme included money mules who were hired to withdraw the stolen money from ATMs and store it in safety deposit boxes and luggage lockers at train stations. Within a 12-hour period, $9 million in cash was withdrawn from 2,100 ATMs in 280 cities around the world
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The Problem Changed - Easy to get
For $1500 US (Paid with a VISA/MC) you could have card readers, writers, embossing equipment, and 100 blank cards. I could have a restaurant or retail location skimming cards one day, and be using them just days later.
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Purpose Built Skimmers
Small battery operated skimmers can hold up to 5000 account numbers at a time Wired and Wireless, POS and ATM, Cameras, key overlays. Skimming devices get more and more intricate daily. RCMP : “Counterfeit credit card use: This represents the largest category of credit card fraud, involving Canadian issued cards, with 49% of all dollar losses. Organized criminals have acquired the technology that allows them to "skim" the data contained on magnetic stripes, manufacture phony cards, and overcome such protective features as holograms Criminals implant a chip directly into Point of Sale equipment Example: ,000cards seized in Taipei, Taiwan
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…Even instructions on YouTube
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2005 vs 2010 Fraud Type Breakdown
Same industries are taking the pain… Debit Pin Trends Source: PULSE Issuer Study Types of Merchants affected source: Now You See It, Now You Don’t: A Review of Fraud Costs and Trends , Krista Tedder, First Data Corp (2009) Description Category Code Percent of Reported Fraud Average Dollar Loss Gas Stations and Service Stations 5542 and 5541 14.50% $77.28 Discount Stores 5310 5.50% $304.30 Grocery/Supermarket Stores 5411 4.75% $231.27
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Sub-Second Real Time Request Response
How does PRISM Work Sub-Second Real Time Request Response Authorization Request Authorization Response PRISM Score PRISM Real Time Extract Post Authorization Alerts Post Auth Rules Decline Alerting Real Time vs. Post Authorization Systems – Each type of system provides advantages and disadvantages. Best solution will use both to achieve the maximum result. Real Time Advantages Effect Transactions “in-flight” to stop fraud Stop trends quickly when you find them Challenges Short Response Times can effect authorization responses Low False Positive Customer “Insult” Rate Limited Data Post Authorization Fraud System No effect to transaction processing Operate at higher false positives to spot trends Many losses may have already happened Usually stop fraud after >2 transactions by blocking account High customer “touch” All auth data and cardholder data available PRISM Score Post Auth Rules NRT Rule Alerting Retail Decisions, Inc – Confidential & Proprietary
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PRISM Scoring Engine
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ReD - Key features of Neural Networks
Learned solution Solution accurately models the underlying patterns in the data Iterates to converge on a global error minima Captures non-linearity and inter-feature dependence Incremental Learning Adaptive systems which learn from new experience Reinforces existing trends and learns new trends Reasons for decision making Localized neural networks provide exact reasons Real-world tested In commercial applications since early 1980s Used successfully in reducing card fraud worldwide Capable of processing large amounts of data c a 15 15
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Transaction Fraud Scoring
Customer Account Non-Monetary Activity Transaction Activity Chargebacks Events Authorization Read Merchant Data Object Merchant Database Derive Features Change in Individual Merchant usage patterns SCORING ENGINE 16
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Transaction Fraud Scoring
Compare this particular change in usage with Neural Memory of legitimate & fraudulent changes in account Authorization Read Merchant Data Object Merchant Database Derive Features Alert Neural Network Fraud Score (0-999) SCORING ENGINE
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PRISM Real Time
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PRISM Real-Time High Level System Flow
Entrance Criteria As defined by the customer, these are the rules on which transactions need to be scanned in real time. Excluded Immediate Response Positive and Negative database. Accounts and terminal are checked against this list to determine if they should be approved or denied immediately based on this information. Included Screening Database Found Card or Terminal Not In DB Transactions are scored relative to cardholder profiles of activity using neural model. Neural Score TXN + Score User defined Rules are executed against the transactions. Transactions can be approved or denied, but no ALERT is generated by this system Business Rules Rules Result
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No – Recommend approval
Real Time System Flow Authorization System Transactions are “Included” or “Excluded” in RT screening based on customer selected criteria. Not all transactions have the same risk and require the same overhead. All Transaction are fed to the system and logged for velocity. All Transactions Exclude Result Entrance Criteria Include Yes – Recommend denial No – Recommend approval Services are executed in order to respond to the request as quickly as possible. Neural score is added to the transaction to enhance the options with the business rules engine. Service Manager Screening Database Neural Score Business Rules Other Excluded Executed at Lower Priority Transaction Database Neural Database
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PRISM Real Time Decisioning
Customized implementation based on your authorization system Suite includes Browser based administrative controls Service Based Architecture including Configurable Entrance Criteria Full control over what is “decisioned” or responded to immediately, with full logging of account history Real Time Neural Engine Real Time neural score Positive/Negative Database Allow data elements like Account Number or Terminal ID to be entered in Positive/Negative lists Complex Business Rules Engine Standard rules Velocity rules “Block Account” interface for requests to add/remove 15 day historical database Integration to NRT system for alerts or decline management
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Real-Time and NRT Interaction
PRISM Real-Time System All approved and denied transactions are shipped from the RT system to he NRT system. PRISM RT Database (all Score + Decision data) Neural Score may have been calculated in Real Time. All Transactions NRT Rules may have higher false positive, slower executions or different criteria for alerting to send to agents or automated contact systems. PRISM Alerts (NRT) System Score (Optional) Existing workflow of alerted accounts and transaction is utilized to increase efficiency. NRT Rules Queues Workflow
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PRISM Alerts (NRT) Retail Decisions, Inc – Confidential & Proprietary
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PRISM High Level Processing Flow
Retail Decisions, Inc – Confidential & Proprietary
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PRISM Alerts System - Benefits
Case Management All account, transaction and customer interaction data on one screen Improves quality of customer care Workflow Alerts are prioritized and routed to analysts for immediate review Sophisticated queuing software Improves operational efficiency Strategy Software “Test drive” rules and measure performance before production “roll-out” Instant deployment of rules without IT involvement Implement and monitor risk management policies Monitoring and Reporting Comprehensive suite of performance reports Report Wizard to construct, schedule and deploy customized reports Continuous fraud loss and trend measurement and mitigation Retail Decisions, Inc – Confidential & Proprietary
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A&R – Rule Queue Relationship
All Transactions PRISM Rules Engine Purpose: Identify fraud All alerts: 0.1% - 1% of volume Queue Facility Risky MCC queue Risky city queue High amount queue . . . 2 1 Purpose: Targeted alert distribution / Facilitate reviewer expertise Retail Decisions, Inc – Confidential & Proprietary
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PRISM Rules Engine PRISM Rules engine allows complicated business rules to be run on transaction receipt to detect fraud events Rules can be written by Business Users, not IT staff PRISM supports many types of near real-time rules Transaction-centric rules Rules employing the neural score in isolation and in combination with non-neural data elements Rules requiring account history Velocity - Number of transactions on card / account in user-defined time period Aggregated amount - Average / total amount per card / account in past X days Hybrid combinations Examples: Support all standard SQL operators (<,>, etc), Booleans (AND, OR, NOT, etc), string operations (IN, etc), wildcards (%) Rules requiring negative tables Geolocation – Implemented as pass-through features Average distance between merchants for all purchases in past 30 days Average distance between CDH home and merchant in past 30 days Any valid SQL condition which does not prohibitively impact throughput Rules combined with Boolean OR [Rule set 1] OR [Rule set 2] OR [Rule set 3] … Accounts which trigger at least one rule statused as alert Rollup Rules – PRISM MERCHANT ONLY Created at System setup 7, 15,30 days daily average deposit, etc. Maximum number and complexity of production rules limited by Number of historical versus transaction-centric rules Historical rules slower SQL optimization Database optimization Retention
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PRISM 8.x Thin Client Main Screen
Information on Account holder, account relationship andnon-monetary activities can be displayed here in a single view Tool Bar for quick access to standard functions Quick highlights of account status Display of funds at Risk and Fraud Already Reported Button to expand “panes” of the view. Extensive account information can be displayed on these screens including financial info, account history or information from external sources 90 Day account activity history – All transactions Charting of trends on the account A single account may have multiple cards. Click here to see status of all associated cards. History of all agent and system activity on this account If there are Fraud Transactions on this account, use this button to quickly access the screen to Mark Fraud Transactions
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Analysis and Review System - Benefits
Case Management All account, transaction and customer interaction data on one screen Improves quality of customer care Workflow Alerts are prioritized and routed to analysts for immediate review Sophisticated queuing software Improves operational efficiency Strategy Software “Test drive” rules and measure performance before production “roll-out” Instant deployment of rules without IT involvement Implement and monitor risk management policies Monitoring and Reporting Comprehensive suite of performance reports Report Wizard to construct, schedule and deploy customized reports Continuous fraud loss and trend measurement and mitigation
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PRISM®Fraud Review Workstation
… Browser Based … flexible queuing functionality … prioritization of alerts … iterative review and workflow … all with “point and click” navigation
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PRISM Analytical Tools
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PRISM PinPoint - CPP / POC Detection & Mitigation
Benefits Dramatically reduce your counterfeit fraud losses Identify merchants unknowingly targeted by skimmers Isolate cards which are about to be used fraudulently Automatically detect in minutes what takes you weeks of manual review Protect your cardholders confidence in you
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Common Point of Purchase
Typical Counterfeit Activity Skimming: The fraudster secures a number of credit or debit account numbers at the original Common Point of Purchase, this location is known as the Point of Compromise. Testing: The fraudster makes purchases for small denominations on an unattended terminal or e-commerce website to determine which of the accounts are active thus creating a second Common Point of Purchase. Slamming: Fraudster rapidly perpetrates repetitive fraud on each active account. Common Points of Purchase (CPP) and Points of Compromise (POC) Data Mining: Interactive data analysis to locate CPP Triangulation: Expand search and mining criteria to locate “testing” terminals and POC Prevention: Block-and-reissue compromised cards that have not been used search and mining criteria to locate “testing” terminals and POC
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PinPoint Screens
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What is PRISM RulesPlus?
Rule Performance Quantification Create statistically measured data samples random, or be a target subset, such as ‘all commercial cards’, to target fraud in specific portfolios or data segments Enables the user to quantify the performance of rules prior to releasing them into production Enables the user to quantify rule performance on one or more samples of data, allowing them to accelerate the rule optimization process
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PRISM RulesPlus Features
Benefits Sample: Create random and targeted sample segments to evaluate performance. Evaluate: Measure performance of single or a family of rule sets. Quantify: Obtain fraud detection and false positive rates of rules prior to deployment.
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Why ReD ? Focus Financials Global Presence Expertise
This is our core competency. This is what we do and do it well We are there for our customers as fraud evolves Our competitor’s customers are converting to ReD Financials ReD has high earnings stability Profitable and double-digit growth for the past five years Global Presence Fraud is an international issue without borders We learn and transfer knowledge from each territory We rapidly deploys our services as fraud evolves and migrates Expertise Some of the top fraud managers in the world are employees of ReD Our objective is to maximize valid transactions not just stop bad ones We help our customers balance the trade-off between risk and opportunity Retail Decisions, Inc – Confidential & Proprietary
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Benefits of PRISM Application
Complete Solution Real Time and Near Real-Time Decisioning Fraud alert Case management Reporting on agent and system performance Integrated communications Increase detection and lower false positives PRISM Neural Engine User defined business rules Configurable User defined workflow Automated Actions Tieback to other systems
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Benefits of PRISM Partnership approach Tailored and customized
Collaborate with Customer to demonstrate immediate and measurable value Ongoing application review to ensure performance World wide and multi-channel fraud expertise Consultative relationship throughout contract Tailored and customized Truly tailored solution for functions and verticals Detailed and ongoing review of business objectives to ensure the application meets the need Customizable options for SMS, , and ARU integrations available Technology Provides hybrid technology solution using Neural, Rules and Analytic solutions. Focused on developing products to help fraud managers Committed to this solution as we use it for our own business
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Benefits of RD Multi-channel Solution Scalable Support
Incorporates activity across all customer interaction channels Monitors deposits and “non-monetary” transactions Risk weighting for products Risk weighting for risky merchant categories Facilitates communication of Alert both inside and outside the organization with multiple channels Scalable Linear scalability of all components Designed for phased roll-out across business lines and products High volume transaction processing Experts in Real Time Fraud decisions Support Solution supported by internal resources Rated “top-notch” by our customers
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Why Choose Retail Decisions?
Focus Payments Fraud Detection is our core competency. We are there for our customers as fraud evolves Participate in Issuer, Acquirer and Merchant fraud prevention Hosted and fully managed worldwide fraud solutions for over 10 years Global Presence Fraud is an international issue without borders We learn and transfer knowledge from each territory We rapidly deploys our services as fraud evolves and migrates Expertise Some of the top fraud managers in the world are customers of ReD Our objective is to maximize valid transactions not just stop bad ones We help our customers balance the trade-off between risk and opportunity
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Why choose Retail Decisions?
Stay Focused on Customer Business Create environment for iterative improvement Monitor False Positives Continual review of system effectiveness Focus manual efforts on most likely alerts Ensure enough data to make effective decisions is available on the alert Communicate trends Use information we have to establish more value Establish and maintain account relationship focused on the industry
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Customer References and Projects
Customer Commitment Our customer relationships stand as a testament to our commitment to their success. We would arrange reference with any of our customers We regularly attend all customer internal product meetings to ensure we are part of the team Conversions from competitors products We have converted two customers off PRM as live software installs, Both took less than 10 weeks. Both required multiple installations of the PRISM product (Credit and Debit). Neither were required to change SEIP message. Both received new “quick start” models as part of the conversion, with complete custom models within 4 months. New tools available are providing them more options to bring additional data into the PRISM Score and Rules than was available previously
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Questions / Next Steps? Questions / Next Steps
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PRISM® Debit: Intelligent Fraud Monitoring
Presentation to Banamex THANK YOU Retail Decisions, Inc
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