FICO Fraud Clients Have Cut Card-Not-Present Fraud 57 Percent Since 2010, New Data Shows
70+ percent of card fraud in Europe involves CNP transactions
LONDON, Feb. 11, 2013 /PRNewswire/ -- FICO (NYSE: FICO), the leading provider of analytics and decision management technology, today released data showing that card issuers using FICO® Falcon® Fraud Manager have dramatically cut card-not-present (CNP) fraud losses from credit cards over the last two years, from £28 million in April 2010 to less than £12 million in March 2012. CNP fraud, which includes illegitimate online, mail order and phone transactions, is the most prevalent type of card fraud, accounting for about three-quarters of card fraud in the FICO® Falcon® Fraud Consortium for Europe, which includes 44 million active credit cards.
"CNP fraud is now the top focus for card fraud across the region, as issuers look for new technology and best practices to stop the most widespread form of card fraud," said Martin Warwick, FICO's Fraud Chief in Europe, the Middle East and Africa. "FICO's advanced fraud technology is enabling users to outperform the market. For comparison, industry-wide figures from Euromonitor show only modest declines in CNP fraud from 2010 to 2011, with the largest fall at just 6 percent in the UK."
CNP fraud was behind 72 percent of all accounts victimized by fraud and 74 percent of all card fraud losses in the FICO Falcon Fraud Consortium. This was higher than in last year's data, where the figures were 69 percent and 72 percent, respectively.
"Criminals are migrating to the easiest way of using compromised cards, which today is the internet," said Warwick. "For example, fraud as a percentage of internet sales in the UK is 22 basis points (0.22 percent), which is double the rate for credit card transactions overall. In addition, 3D Secure protocols are moving the liability on losses from the retailer to the issuer.
"This puts great pressure on card issuers to resolve the CNP fraud problem, and it's why issuers are looking at new capabilities in FICO Falcon, such as merchant profiling. As shown in the fraud map of Europe we released last year, countries with the strongest fraud detection systems have reduced fraud relative to countries that are lagging on the technology adoption curve."
During the analysis window, April 2010 to March 2012, only about 1 percent of cards studied were victimized by fraud.
FICO's data comes from card issuers in Germany, the UK, Ireland, the Netherlands, Poland and Switzerland. FICO analyzed this data to develop the UK & Ireland Credit version 14 and European Union Credit version 6 analytic models for FICO® Falcon® Fraud Manager. These models are now available for FICO clients in the region, and show a marked increase in predictive power compared to previous models. FICO Falcon Fraud Manager is the world's leading card fraud management system, protecting more than 2 billion payment cards worldwide.
FICO (NYSE: FICO), formerly known as Fair Isaac, delivers superior predictive analytics solutions that drive smarter decisions. The company's groundbreaking use of mathematics to predict consumer behavior has transformed entire industries and revolutionized the way risk is managed and products are marketed. FICO's innovative solutions include the industry-leading solutions for measuring credit risk, managing credit accounts, identifying and minimizing the impact of fraud, and customizing consumer offers with pinpoint accuracy. Most of the world's top banks, as well as leading insurers, retailers, pharmaceutical companies and government agencies, rely on FICO solutions to accelerate growth, control risk, boost profits and meet regulatory and competitive demands. Learn more at www.fico.com. FICO: Make every decision count™.
For FICO news and media resources, visit www.fico.com/news.
Statement Concerning Forward-Looking Information
Except for historical information contained herein, the statements contained in this news release that relate to FICO or its business are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the success of the Company's Decision Management strategy and reengineering plan, the maintenance of its existing relationships and ability to create new relationships with customers and key alliance partners, its ability to continue to develop new and enhanced products and services, its ability to recruit and retain key technical and managerial personnel, competition, regulatory changes applicable to the use of consumer credit and other data, the failure to realize the anticipated benefits of any acquisitions, continuing material adverse developments in global economic conditions, and other risks described from time to time in FICO's SEC reports, including its Annual Report on Form 10-K for the year ended September 30, 2012 and its last quarterly report on Form 10-Q for the period ended December 31, 2012. If any of these risks or uncertainties materializes, FICO's results could differ materially from its expectations. FIC O disclaims any intent or obligation to update these forward-looking statements.
FICO, Falcon and "Make every decision count" are trademarks of Fair Isaac Corporation in the United States and other countries.
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