Empowering Cardholders to Help Prevent Fraud

by The Members Group 0

By Nicole Reyes, The MembersGroup Senior Fraud Prevention Analyst

Fraud prevention is a hot topic today, and the leaders offinancial institution (FI) payments teams have an insatiable appetite forinformation on how to keep fraudsters at bay. As such, The Members Group (TMG) recentlyreleased a series of three white papers on must-have fraud detection andprevention strategies. In the most recent of these papers, “EmpoweringCardholders to Help Prevent Card Fraud,” we explore how the recent hackingof three large retailers’ payment systems has motivated U.S. consumers tobecome more involved in the fight against fraudsters.

What follows is a brief excerpt from that paper. You can access the entirepaper here.

When several popularretailers recently announced their payment systems had been hacked, mediaoutlets throughout the country were hooked on the story.

As a result,cardholders from all over the U.S. phoned their card issuers to find out whatthey should do to protect their accounts. News of a major data breach, itseemed, had finally hit home for millions of American consumers.

For those on the frontlines of fraud detection and prevention, this consumer wake-up call was longoverdue. That’s because each of us understands the incredible value ofdiligent, aware cardholders in the fight against an ever-growing, sophisticatedcontingent of counterfeiters who target the U.S. card payments system.

Much of this is due tothe fact that today’s consumer fraud tools rely on triggers set by thecardholders themselves. Although fraud detection strategies are becomingextremely granular with every new version of fraud-prevention software, aconsumer remains the best at predicting his or her own purchase behavior.Consumers are, therefore, most equipped to understand which types oftransactions qualify as unusual for their accounts.

In the paper, we identify two essential ways for FIs to takeadvantage of this newfound motivation by arming their cardholders withdefenses. First, we advocate for consumer education on fraud trends and tips consumerscan use to protect themselves.

Helping cardholdersspot trouble before it impacts them is incredibly valuable, not only for theindividual, but also for the FI. The overabundance of communication vehiclesavailable to FIs today makes it easier to share a large amount of informationquickly and broadly. When researching content for blogs, social channels,newsletters, emails, statement stuffers and more, consider fraud-focused tipsand advice.

Second, TMG suggests FIs put actual fraud prevention tools,such as text or email alerts, in the hands of their cardholders.

Triggered by an FI’sown unique fraud prevention strategies, fraud text alerts are customized to anindividual credit union or community bank’s existing program. If a particulartransaction is flagged as risky, human fraud analysts take a look at thetransaction in the context of the account and the existing strategies, and ifwarranted, verify the transaction by texting the cardholder…There is no need towait for a significant breech to remind your cardholders just how important itis to be diligent when monitoring their card accounts and transactions.

The above are excerpts from the TMG white paper “Empowering Cardholders to HelpPrevent Card Fraud.” We’ve also released two other whitepapers in this series:

Biometric Authentication Headingfor Payments Space,” which highlights the influence ofbiometrics in other industries and explores whether or not consumers are readyfor biometrics in their everyday exchange of money

Fraud Protection is a Must Havethis Holiday Season,” which offerstips on providing the best possible shopping experience for cardholders whilealso monitoring for card fraud during the heavy holiday spend season