prism ® : intelligent fraud monitoring presentation to retail decisions, inc +1 401 228 2355

PRISM® : Intelligent

Fraud Monitoring

Presentation to

<Customer Name>

<name><title><[email protected]>

Retail Decisions, Inc+1 401 228 2355www.red-usa.com

<date>

<Customer Logo>

Retail Decisions, Inc – Confidential and Proprietary

Agenda

• What is PRISM?• Why do I need it?• How does it work?• What are the Benefits?• Why would I buy it from ReD?


Retail Decisions, Inc – Confidential & Proprietary

What is PRISM

• PRISM is a software solution or hosted service to financial institutions, processors and switches for prevent payment fraud prevention

• ReD protects transactions in Real Time (RT) or Near Real Time (NRT) and works against any acceptance channel

• The PRISM Product Suite combines:– Complex Business Rules Engine with full business user control– Custom trained Neural networks– Alert Case Management– Workflow– Monitoring and Reporting – Analytics products for strategy development– CPP/POC detection


Where does PRISM Fit?


Consumer Shops and Makes Purchase

Merchant Sends Authorization Request to Acquirer

Acquirer Sends Auth request (via Networks) to Issuing Bank

Authorization Response Generated and Sent by Issuer

Acquirer sends response to Merchant

Consumer Notified Purchase Complete

Statement and Billing

Payment or Chargeback

Acquirer

Merchant

Issuer

Cardholder


PRISM – Complete Solution

• Rule based systems– Focus on what we know about fraud control

– Known fraud schemes can be prevented easily with rules– Challenges

– If the rules are too tight … we catch nothing– If the rules are too loose … we drown in reviews– Rules don’t adapt to evolving fraud patterns

• Statistical solutions– Focus on understanding fraud

– Fraud trend analysis– Helps create complex rules for fraud detection

– Challenges– Not a “dynamic” solution … doesn’t keep pace with changing schemes

• Neural Networks– Focus on what we don’t know about fraud

– Earliness of detection– Easy control of caseload vs false positive rates vs percentage detection– Increased fraud savings

5


PRISM® Products

• PRISM Real Time– Real-Time Transaction Decisioning

• PRISM Credit and Debit– Credit and Debit Card Fraud Detection

• PRISM Merchant– Merchant Risk Management

• PRISM AML– Anti Money Laundering

• PRISM RulesPlus– Intelligent Rule Development and Testing

• PRISM PinPoint– Point of Compromise detection

• ReD Shield– Real-time CNP fraud prevention


The Problem Changed – Organization and Speed

The scheme included money mules who were hired to withdraw the stolen money from ATMs and store it in safety deposit boxes and luggage lockers at train stations. Within a 12-hour period, $9 million in cash was withdrawn from 2,100 ATMs in 280 cities around the world

http://blogs.bankinfosecurity.com/posts.php?postID=868


The Problem Changed - Easy to get


Purpose Built Skimmers


…Even instructions on YouTube


2005 vs 2010 Fraud Type Breakdown

Description Category Code Percent of Reported Fraud Average Dollar Loss

Gas Stations and Service Stations 5542 and 5541 14.50% $77.28

Discount Stores 5310 5.50% $304.30

Grocery/Supermarket Stores 5411 4.75% $231.27

Same industries are taking the pain…

2004 2007 2008 20090

1

2

3

4

5

6

7

8

9

Debit Fraud Trends

Pin

Signature

Bas

is P

oin

ts o

f F

rau

d


How does PRISM Work


Authorization Request

Authorization Response

PRISM Real Time

Decline Alerting

NRT Rule Alerting

Sub-Second Real Time Request Response

Post Authorization Alerts

PRISM Score

Post Auth Rules

Post Auth Rules

PRISM Score

Extract


PRISM Scoring Engine


ca

• Learned solution– Solution accurately models the underlying patterns in the data– Iterates to converge on a global error minima– Captures non-linearity and inter-feature dependence

• Incremental Learning– Adaptive systems which learn from new experience– Reinforces existing trends and learns new trends

• Reasons for decision making– Localized neural networks provide exact reasons

• Real-world tested– In commercial applications since early 1980s– Used successfully in reducing card fraud worldwide– Capable of processing large amounts of data

ReD - Key features of Neural Networks

15


Transaction Fraud Scoring

SCORING ENGINE

Authorization Read Merchant

Data Object

Merchant

Database

Customer Account

Non-Monetary Activity

Transaction Activity

Chargebacks

Events

Derive

Features

Change in Individual Merchant

usage patterns


Transaction Fraud Scoring

SCORING ENGINE

Authorization

Neural

Network

Fraud Score (0-999)

Derive

Features

Compare this particularchange in usage with

Neural Memory oflegitimate & fraudulent

changes in account

Read Merchant

Data Object

Merchant

Database

Alert


PRISM Real Time


Imm

edia

te

Res

pons

e

Entrance Criteria

Screening Database

Neural Score

Business Rules

As defined by the customer, these are the rules on which transactions need to be scanned in real time.

Positive and Negative database. Accounts and terminal are checked against this list to determine if they should be approved or denied immediately based on this information.

Transactions are scored relative to cardholder profiles of activity using neural model.

User defined Rules are executed against the transactions. Transactions can be approved or denied, but no ALERT is generated by this system

Excluded

Found Card or Terminal

Included

Rules Result

PRISM Real-Time High Level System Flow

Not InDB

TXN + Score


PRISM Real Time Decisioning

• Customized implementation based on your authorization system• Suite includes

– Browser based administrative controls– Service Based Architecture including

• Configurable Entrance Criteria – Full control over what is “decisioned” or responded to immediately, with full logging of

account history

• Real Time Neural Engine– Real Time neural score

• Positive/Negative Database– Allow data elements like Account Number or Terminal ID to be entered in

Positive/Negative lists

• Complex Business Rules Engine– Standard rules– Velocity rules

• “Block Account” interface for requests to add/remove • 15 day historical database

– Integration to NRT system for alerts or decline management


PRISM RT Database(all Score + Decision data)

PRISM Real-Time

System

All Transactions

PRISM Alerts (NRT)System

Score (Optional)

NRT Rules

Queues

Workflow

All approved and denied transactions are shipped from the RT system to he NRT system.

Neural Score may have been calculated in Real Time.

NRT Rules may have higher false positive, slower executions or different criteria for alerting to send to agents or automated contact systems.

Existing workflow of alerted accounts and transaction is utilized to increase efficiency.

Real-Time and NRT Interaction


PRISM Alerts (NRT)



PRISM High Level Processing Flow




PRISM Alerts System - Benefits

• Case Management– All account, transaction and customer interaction data on one screen– Improves quality of customer care

• Workflow– Alerts are prioritized and routed to analysts for immediate review– Sophisticated queuing software– Improves operational efficiency

• Strategy Software– “Test drive” rules and measure performance before production “roll-out”– Instant deployment of rules without IT involvement– Implement and monitor risk management policies

• Monitoring and Reporting– Comprehensive suite of performance reports– Report Wizard to construct, schedule and deploy customized reports– Continuous fraud loss and trend measurement and mitigation



A&R – Rule Queue Relationship

PRISM

All Transactions

All alerts: 0.1% - 1% of volume

Rules EnginePurpose: Identify fraud

Queue Facility

Risky MCC queue

Risky city queue

High amount queue. . .

21

Purpose: Targeted alert distribution / Facilitate reviewer

expertise


PRISM Rules Engine

• PRISM Rules engine allows complicated business rules to be run on transaction receipt to detect fraud events

• Rules can be written by Business Users, not IT staff• PRISM supports many types of near real-time rules

• Transaction-centric rules• Rules employing the neural score in isolation and in combination with non-neural data

elements• Rules requiring account history

• Velocity - Number of transactions on card / account in user-defined time period• Aggregated amount - Average / total amount per card / account in past X days• Hybrid combinations• Examples: Support all standard SQL operators (<,>, etc), Booleans (AND, OR, NOT, etc),

string operations (IN, etc), wildcards (%)

• Rules requiring negative tables• Geolocation – Implemented as pass-through features

• Average distance between merchants for all purchases in past 30 days• Average distance between CDH home and merchant in past 30 days

• Any valid SQL condition which does not prohibitively impact throughput


PRISM 8.x Thin Client Main Screen

Tool Bar for quick access to standard functions

Quick highlights of account status

Information on Account holder, account relationship andnon-monetary activities can be displayed here in a single view

Display of funds at Risk and Fraud Already Reported

90 Day account activity history – All transactions

A single account may have multiple cards. Click here to see status of all associated cards.

If there are Fraud Transactions on this account, use this button to quickly access the screen to Mark Fraud Transactions

History of all agent and system activity on this account

Charting of trends on the account

Button to expand “panes” of the view. Extensive account information can be displayed on these screens including financial info, account history or information from external sources


Analysis and Review System - Benefits

• Case Management– All account, transaction and customer interaction data on one screen– Improves quality of customer care

• Workflow– Alerts are prioritized and routed to analysts for immediate review– Sophisticated queuing software– Improves operational efficiency

• Strategy Software– “Test drive” rules and measure performance before production “roll-out”– Instant deployment of rules without IT involvement– Implement and monitor risk management policies

• Monitoring and Reporting– Comprehensive suite of performance reports– Report Wizard to construct, schedule and deploy customized reports– Continuous fraud loss and trend measurement and mitigation


… Browser Based

… flexible queuing functionality

… prioritization of alerts

… iterative review and workflow

… all with “point and click” navigation

PRISM®Fraud Review Workstation

Level 2

Level 1

Not Fraud

Next A

lert

Next Alert

Nex

t Ale

rt

Nex

t Ale

rt

Not Fraud

Block A

ccount

Pot

entia

l Fra

ud

New Merchant over 10,000 Daily Avg

Queue

High Risk MCC Queue

Investigate

Bank

Customer

Other Systems

Suspend P

ayment

Investigate

Bank

Customer

Other Systems

Tie-Back to Merchant Accounting and Payment System

No

Act

ion

– P

aym

ent

as u

sual

Adjust R

eserve


PRISM Analytical Tools


PRISM PinPoint - CPP / POC Detection & Mitigation

• Benefits – Dramatically reduce your counterfeit fraud losses

– Identify merchants unknowingly targeted by skimmers

– Isolate cards which are about to be used fraudulently

– Automatically detect in minutes what takes you weeks of manual

review

– Protect your cardholders confidence in you


Common Point of Purchase

• Typical Counterfeit Activity– Skimming: The fraudster secures a number of credit or debit

account numbers at the original Common Point of Purchase, this

location is known as the Point of Compromise.

– Testing: The fraudster makes purchases for small denominations

on an unattended terminal or e-commerce website to determine

which of the accounts are active thus creating a second Common

Point of Purchase.

– Slamming: Fraudster rapidly perpetrates repetitive fraud on each

active account.

• Common Points of Purchase (CPP) and Points of Compromise

(POC)– Data Mining: Interactive data analysis to locate CPP

– Triangulation: Expand search and mining criteria to locate “testing”

terminals and POC

– Prevention: Block-and-reissue compromised cards that have not

been used search and mining criteria to locate “testing” terminals

and POC

http://blogs.consumerreports.org/.a/6a00d83451e0d569e20133f2820e84970b-pi

http://www.merchantaccountblog.com/667/spotting-large-scale-credit-card-fraud


PinPoint Screens


What is PRISM RulesPlus?

• Rule Performance Quantification• Create statistically measured data samples random,

or be a target subset, such as ‘all commercial cards’, to target fraud in specific portfolios or data segments

• Enables the user to quantify the performance of rules prior to releasing them into production

• Enables the user to quantify rule performance on one or more samples of data, allowing them to accelerate the rule optimization process


PRISM RulesPlus Features

• Benefits

– Sample: Create random and targeted sample

segments to evaluate performance.

– Evaluate: Measure performance of single or a

family of rule sets.

– Quantify: Obtain fraud detection and false

positive rates of rules prior to deployment.



• Focus– This is our core competency. This is what we do and do it well – We are there for our customers as fraud evolves– Our competitor’s customers are converting to ReD

Why ReD ?

• Financials– ReD has high earnings stability– Profitable and double-digit growth for the past five years

• Global Presence– Fraud is an international issue without borders– We learn and transfer knowledge from each territory– We rapidly deploys our services as fraud evolves and migrates

• Expertise– Some of the top fraud managers in the world are employees of ReD– Our objective is to maximize valid transactions not just stop bad ones– We help our customers balance the trade-off between risk and

opportunity


Benefits of PRISM Application

• Complete Solution– Real Time and Near Real-Time Decisioning– Fraud alert Case management– Reporting on agent and system performance– Integrated communications

• Increase detection and lower false positives– PRISM Neural Engine– User defined business rules

• Configurable– User defined workflow– Automated Actions– Tieback to other systems


Benefits of PRISM

• Partnership approach– Collaborate with Customer to demonstrate immediate and

measurable value– Ongoing application review to ensure performance– World wide and multi-channel fraud expertise– Consultative relationship throughout contract

• Tailored and customized– Truly tailored solution for functions and verticals– Detailed and ongoing review of business objectives to ensure the

application meets the need– Customizable options for SMS, Email, and ARU integrations

available

• Technology– Provides hybrid technology solution using Neural, Rules and Analytic

solutions.– Focused on developing products to help fraud managers – Committed to this solution as we use it for our own business


Benefits of RD

• Multi-channel Solution– Incorporates activity across all customer interaction channels

• Monitors deposits and “non-monetary” transactions• Risk weighting for products• Risk weighting for risky merchant categories

– Facilitates communication of Alert both inside and outside the organization with multiple channels

• Scalable– Linear scalability of all components– Designed for phased roll-out across business lines and products– High volume transaction processing– Experts in Real Time Fraud decisions

• Support– Solution supported by internal resources– Rated “top-notch” by our customers


• Focus– Payments Fraud Detection is our core competency. – We are there for our customers as fraud evolves– Participate in Issuer, Acquirer and Merchant fraud prevention– Hosted and fully managed worldwide fraud solutions for over 10 years

• Global Presence– Fraud is an international issue without borders– We learn and transfer knowledge from each territory– We rapidly deploys our services as fraud evolves and migrates

• Expertise– Some of the top fraud managers in the world are customers of ReD– Our objective is to maximize valid transactions not just stop bad ones– We help our customers balance the trade-off between risk and opportunity

Why Choose Retail Decisions?


Why choose Retail Decisions?

• Stay Focused on Customer Business– Create environment for iterative improvement– Monitor False Positives– Continual review of system effectiveness– Focus manual efforts on most likely alerts– Ensure enough data to make effective decisions is available on the

alert– Communicate trends– Use information we have to establish more value– Establish and maintain account relationship focused on the

industry


Customer References and Projects

• Customer Commitment– Our customer relationships stand as a testament to our commitment to their

success.– We would arrange reference with any of our customers– We regularly attend all customer internal product meetings to ensure we are

part of the team

• Conversions from competitors products– We have converted two customers off PRM as live software installs, Both

took less than 10 weeks.– Both required multiple installations of the PRISM product (Credit and Debit).– Neither were required to change SEIP message.– Both received new “quick start” models as part of the conversion, with

complete custom models within 4 months.– New tools available are providing them more options to bring additional data

into the PRISM Score and Rules than was available previously


QUESTIONS / NEXT STEPSQuestions / Next Steps?

PRISM® Debit:

Intelligent Fraud Monitoring Presentation to

Banamex

THANK YOU

Retail Decisions, Inc+1 401 228 2355www.red-usa.com

prism ® : intelligent fraud monitoring presentation to retail decisions, inc +1 401 228 2355

Documents

proprietary retail decisions

prism prism

prism work retail decisions

prism fit

proprietary purpose

proprietary agenda

fraud control

fraud schemes