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Date: Tue, 14 Jun 2005 11:19:33 -0400 To: Philodox Clips List <[EMAIL PROTECTED]> From: "R.A. Hettinga" <[EMAIL PROTECTED]> Subject: [Clips] Visa Sets Antifraud-System Upgrade Reply-To: [EMAIL PROTECTED] Sender: [EMAIL PROTECTED] <http://online.wsj.com/article_print/0,,SB111861457869157418,00.html> The Wall Street Journal June 13, 2005 MONEY Visa Sets Antifraud-System Upgrade New Tool Aims to Prevent Bogus Purchase Attempts Right at the Point of Sale By DAVID BANK and DON CLARK Staff Reporters of THE WALL STREET JOURNAL June 13, 2005; Page B4 Visa USA disclosed details of a new technology for preventing fraudulent credit-card transactions, a tool that is already helping limit losses despite a rash of high-profile thefts of customer data. The San Francisco-based credit-card association and its U.S. member banks have been quietly using the new system, dubbed "advanced authorization," for the past year. Visa said the technology, which was formally announced today, can identify as much as 40% of fraudulent transactions that might have slipped through previous antifraud systems. Card issuers face criminal tactics that go well beyond stealing credit cards. Counterfeit cards, for example, can be created by scanning information from customers' cards at stores or restaurants. More recently, large volumes of credit-card numbers have fallen into the hands of computer hackers or criminal gangs, which have used them for fraudulent online transactions or to make counterfeit cards. Antifraud systems help distinguish suspicious purchasing behavior, such as one credit card being used in multiple states within minutes. Such a pattern often can't be detected, however, until some purchases have been made. Visa says its new advanced-authorization system can stop more bogus purchase attempts at the point of sale. "We have the ability to stop the fraud on the first transaction," says Jean Bruesewitz, Visa's senior vice president for processing and emerging products. The new technology provides card-issuing banks with a rating of a transaction's potential for fraud, including whether a card number was part of a reported security breach, Visa said. Besides evaluating whether transactions fit an account-holder's past behavior, the system compares transactions with data gathered across the entire Visa network for possible connections to broader patterns of criminal behavior. Some crooks, for example, set up bogus merchant accounts and test hundreds of credit-card numbers for validity by attempting to charge nominal transactions. The new authorization system is designed to spot and block such behavior. Ms. Bruesewitz said the additional analysis adds fewer than 600 nanoseconds to the time required to process a transaction, even during peak seasons when Visa might process as many as 6,000 transactions per second. "The big difference is that this is done in real time as the transaction is going through as opposed to after the fact," said Adam Frisch, an analyst with UBS AG. Card-issuing banks that have tested the system include Commerce Bancshares Inc. Ken Ragan, an executive vice president of the bank holding company in Kansas City, Mo., praised the greater precision in identifying suspicious transactions. He said the system also generates relatively few "false positives," erroneous alarms about purchasing activity that can generate unnecessary calls to customers by antifraud analysts. Visa USA processes roughly $1.3 trillion in transactions each year. Its fraud rate stands at five cents per $100 in transaction value; Ms. Bruesewitz said the new system could reduce that rate by two cents per $100 in transactions. About 10% of bogus transactions can be intercepted before they are completed, she said, translating into a reduction of about $164 million in fraud-related losses over five years. -- ----------------- R. A. Hettinga <mailto: [EMAIL PROTECTED]> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire' _______________________________________________ Clips mailing list [EMAIL PROTECTED] http://www.philodox.com/mailman/listinfo/clips --- end forwarded text -- ----------------- R. A. Hettinga <mailto: [EMAIL PROTECTED]> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire' --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]