A regional credit union in Florida burned a few years ago by high counterfeit card losses says it has cut its actual losses to one-third what they were before deploying a fraud-prevention service earlier this year.

Since it began using Fiserv Inc.’s Risk Office service in January, MidFlorida Credit Union, which operates 32 branches and 42 ATMs and issues about 100,000 debit and 40,000 credit cards, has cut its expense evaluating “real-time” transactions to about $4,000 per month from $12,000 on average previously, according to Richard Maier, the Lakeland-based institution’s assistant vice president of prevention.

The savings resulted from a reduction in the number of transactions scored for potential fraud to about 400,000 monthly from 1.2 million previously by setting limits on which transactions get scored, he said in an interview with PaymentsSource. Fiserv charges a fee for each scored transaction.

“That was a big savings on our end by being able to send transactions for scoring based on a dollar amount instead of sending all transactions for scoring, even lower-risk ones,” Maier said.

In March, Mike Urban, Fiserv director of financial crimes solutions, told PaymentsSource criminals are attacking smaller organizations more often (see story).

MidFlorida operates in a triangle area bounded by Tampa, Miami and Orlando where fraud rates are high, Maier said. Crooks not only skim a lot of cards in the area, but they also use counterfeit cards subsequently produced in and around those cities, he said.

To help reduce losses, Fiserv’s Risk Office can stop transactions occurring in a particular ZIP code that reach a certain dollar amount the issuer specifies. The extent to which the credit union would block transactions would depend on the type of fraud occurring.

“We have nothing like that in place now because none of that type of fraud is occurring now,” Maier said. “But if we’re seeing bad transactions occurring in the same place repeatedly, we can turn them off.”

When Heartland experienced its data breach in 2008, the institution experienced $200,000 in losses and had to reissue 22,000 cards. “We don’t like to reissue cards,” Maier said.

Risk Office also helps MidFlorida in various other ways. Its TransBlocker software can set a hard block for specified transactions in different countries. But because of local fraud occurring, the credit union also needed something more, Maier said.

So the financial institution began using Fiserv’s EnFact software, which evaluates transactions based on dollar amounts and merchant category codes, enabling the issuer to track or block transactions.

Fiserv’s Compromised Card Tracker also helps to identify which cards resulted in the most fraud. And Case Tracker, a neural network, can identify which cards had the most fraud, helping to overcome situations in which cards might be closed but their fraudulent use was never confirmed, he said.

Card Tracker and Case Tracker work together, Maier said. “We also follow up and try to call the people and send emails to them” when their cards appear to be compromised, he said.

Fiserv monitoring the millions of cards its customers issue also helps to identify fraud for smaller issuers, Maier said. “They can look at their whole portfolio to evaluate trends and compare them to our small portfolio of cards,” he said.

The added protections have given MidFlorida’s cards a reputation for not providing easy funds access when stolen, Maier said.

“We’ve made our [bank identification numbers] undesirable to crooks,” he said. “When they stop getting $200 to $300 a pop, they don’t want to mess with you any more.”

Mid Florida used to see fraud reach up to several thousand dollars on a compromised card, and now the losses range from $100 to $150 on average before the issuer can block use of the counterfeit card, Maier said, noting the institution’s fraud rate in March was 1.04 basis points, down from 1.66 basis points in December. A basis point is one-hundredth of a percentage point.

“For what we pay for this service, Fiserv is the best employee we have,” he told attendees last week at SourceMedia’s Card Forum and Expo. SourceMedia publishes PaymentsSource.

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