PSCU Investing to Proactively Address Emerging Fraud Threats
CUSO reports industry-leading risk management metrics
St. Petersburg, FL – (March 16, 2017) – The targets and techniques used by criminals to commit fraud continue to evolve. PSCU reports that its continued investment in risk management tools and practices collectively work to support, protect and optimize every transaction for its Owners’ members across multiple payment channels and points of interaction.
According to the CUSO, rewards point redemption fraud is a new twist on payment card fraud that targets the loyalty rewards points members accumulate from their debit and credit card transactions. Fraudsters are now attempting to launder money by stealing and reselling reward points or goods.
PSCU has deployed new technology to protect its Owner credit unions that use the CUSO’s CURewards loyalty programs in response to this developing trend. The platform uses an advanced authentication process to validate all entities in the points redemption loop – the device, the member and the redemption transaction. The CUSO’s tool detects suspicious activity through digital risk-engine rules that block and eliminate: blacklisted devices, inconsistent location indicators, suspect form-filling behaviors, and multiple redemptions under different identities from a single device. The tool was instrumental in reducing loyalty fraud in 11 attempts (1.2 million in points value) during its pilot phase of implementation.
“Our success in protecting our Owners and their members from the potential financial and reputational damage from fraud validates our continued commitment to investing in the strongest risk management practices and tools available,” said Jack Lynch, PSCU SVP and Chief Risk Officer. “Our fraud mitigation success metrics are a testament to the quality of the people, processes and technology we deploy every day to optimize our Owners’ business peformance,” Lynch added.
Additionally, the CUSO has adopted an innovative platform from Pindrop to mitigate caller authentication fraud, another emerging type of fraud that targets the technology and human components of call centers. Pindrop is a fintech pioneer in voice security and caller authentication. PSCU is the first credit union service provider to utilize Pindrop’s proprietary platform for fighting call center authentication fraud.
“The partnership with Pindrop enables PSCU to give its Owners increased peace of mind by identifying fraud attempts early on, which reduces costs associated with the fraud lifecycle,” added Lynch. “We will also be able to streamline the member’s authentication experience to enable faster issue resolution time through the voice channel.”
In 2016, the CUSO analyzed and scored 2.1 billion individual transactions for the presence of fraud and investigated 1.7 million transactions based on alerts generated by its fraud detection platform. The company was credited recently for its relentless vigilance in an article by Krebs on Security for being the first to report the recent Arby’s data breach to its Owners – PSCU’s Risk Alert to its Owners was issued a full week before Arby’s officially announced the breach.
The company reports savings for its Owners of over $300 million in losses in 2015 and 2016 by nullifying fraudulent transactions directly at the point of attempt. The company also reports industry-leading fraud-to-sales ratios, as well as above industry average fraud recovery rates for credit and debit cards.
PSCU blocked $146 million in fraudulent transactions at the point-of-sale in 2016 while also reaching the 11 million mark for EMV debit and credit cards issued to address card-present fraud. Since the October 1, 2015 liability shift, PSCU has charged back more than $7.5 million to merchants who have yet to comply with EMV requirements. The company’s net fraud-to-sales ratio of $0.075 per $100.00 in credit card sales easily outperforms the industry average of $0.140. Similarly, the loss ratio of $0.050 for debit cards easily beats the industry average of $0.080.
According to Lynch, PSCU processed 365,000 fraud cases in loss recovery efforts in 2016 for its Owner credit unions. For credit, PSCU recovered 59 percent of fraud losses versus 30 percent for the industry; for debit, the recovery rates for PSCU versus the industry were 68 percent and 40 percent, respectively.
Established in 1977, PSCU (St. Petersburg, Fla.) is the nation's leading credit union service organization (CUSO). The company was recognized as CUSO of the Year in 2016 by the National Association of Credit Union Service Organizations. PSCU’s products, financial services solutions and service model collectively support over 850 Owner credit unions representing more than 20 million credit, debit, prepaid, online bill payment and mobile accounts; protect over 2 billion transactions annually from fraud; and optimize credit union performance and growth. Comprehensive 24/7/365 member support is delivered through call centers located throughout the United States. For more information, visit www.pscu.com.