PULSE Starts Fraud Protection on Debit Transactions
HOUSTON -- The PULSE EFT Association, an affiliate of Discover Financial Services, has rolled out another layer of protection for ATM and debit transactions.
The new service, dubbed DebitProtect, is a neural network that will cover both transactions that use a personal identification numbers and those that cardholders validate with a signature. The service uses a scoring system to evaluate transactions and alerts financial institutions by e-mail should possibly fraudulent transactions be identified.
"Because debit cards are used differently than credit cards, PULSE designed the DebitProtect system based on a highly customized data model developed specifically for debit portfolios," said PULSE President Dave Schneider.
"This neural model will be continuously refined utilizing fraud data obtained from PULSE issuers. In addition, the service was developed for ease of use and does not require any technical changes on the part of PULSE participants. As a result, financial institutions large and small will benefit greatly from the service--the broadest of its kind implemented at the EFT network level."
DebitProtect uses advanced neural network technology to evaluate key transaction characteristics against a customized and constantly evolving risk model built from actual transaction data, PULSE explained. The system is able to "learn" fraudulent behaviors and identify suspicious transactions that either are outside of established cardholder patterns or match known fraud behaviors.
Risk scores are derived from card usage patterns, pre-defined modeling parameters and data from the transactions themselves. Scores that exceed a preset threshold trigger alert e-mails that are sent to issuing institutions. System users then log onto a secure Web site to review information about the suspect transaction, classify it as either fraud or not fraud, and determine the next course of action based on the institution's fraud mitigation policy.
PULSE said the system is being implemented in two stages. The phase 1 rollout provides PULSE-participating debit card issuers with near-real-time transaction monitoring and e-mail notifications 24 hours a day, seven days a week. When phase two is implemented in the fourth quarter of this year, PULSE plans to support automatic blocking of transactions based on rules and parameters established by the issuer.
Although the service at first glance could appear redundant--the Visa and MasterCard networks support a fraud protection program and so do many processors--Brian Munstertieger, a senior card services specialist for the $2.6 billion Randolph-Brooks Federal Credit Union said the service manages to catch some instances of attempted fraud that the others miss.
Randolph-Brooks was one of 14 beta testers for the new service and had roughly three months to work with it.
Munstertieger said that during the beta test the service had managed to track some instances of attempted debit fraud that took place overseas as well as others where there was a lost or stolen card that was being used for unauthorized purchases.
"In the long run I think it is better to keep as many bases covered as we can," Munstertieger said. "No one monitoring service is going to catch all instances and besides the PULSE service also covers debit PIN based transactions," he added.