Reducing debit card fraud losses: Pinpoint compromised cards through ID of common points of compromise

As Americans increasingly shift toward debit cards as a preferred method of payment, it is clear that both personal and card data are reaching unprecedented heights of vulnerability. Large-scale data breaches of major retail chains are front-page news. While such data breaches get the headlines, the often overlooked “smaller” fraudulent activities are having an equally damaging impact on consumer confidence. These include the discovery of a card-skimming device at a local gas pump or the discovery of a false point-of-sale device at the local mall.

A recent study (Q3 2012) from the Aite Group, which surveyed more than 5000 consumers internationally, found that 1 in every 5 American respondents indicated that they experienced debit card fraud in the past five years; only Mexico, China, and India placed higher than the US in this category. According to the Nilson Report, we can expect to see losses due to card fraud to ring in around $10 billion by 2015. Avivah Litan, an analyst at Gartner Research who specializes in fraud detection and prevention, spoke to this growing problem. “As economic conditions have worsened, there’s been a noticeable increase in all types of card fraud. But ATM and debit-card fraud is the top area of concern we’re hearing about from banks all over the world.”

Skimming, from gas pumps to ATMs, is a widespread problem. In response, many financial institutions are turning to account holder education. While this can help address the problem, no amount of education is going to eradicate it. Institutions must find a way to proactively protect account holders and, ultimately, their own reputation and bottom line. One way is through the early detection of a Common Point of Compromise (CPC).

A CPC is a transaction location (such as an ATM or POS terminal) that debit cards share in common. Discovery of a CPC amongst defrauded cards offers the potential to prevent the criminal use of other cards used at that location within a related timeframe, which could easily number in the thousands. In such a case, early detection could mean the prevention of thousands of fraud cases.

Given the number of transactions account holders make every day, it is a formidable task to uncover a CPC through “manual” processes such as the use of spreadsheets. This is the proverbial “needle-in-a-haystack” problem. Incredibly inefficient, it takes valuable time from other fraud and money laundering investigations, and is frustrating for the person that must manually scan the thousands of transactions. Enter advanced transaction monitoring technology, which can revolutionize an investigator’s ability to pinpoint a CPC in seconds.

The latest technological advances in transaction monitoring and fraud detection software let investigators effortlessly search through countless cards to uncover commonalities. Rather than spending hours searching through thousands of transactions, progressive technology can detect commonalities in seconds.

Most people that experience a compromised card alternate between feelings of anger, violation, and a sense of injustice. These feelings are elevated when they discover the fraud before their financial institution finds it. The discovery of a compromised CPC is one of the primary means of stopping debit card fraud quickly, before it can spread to a larger body of account holders. This helps an institution prevent losses to both its bottom line as well as its reputation. Transaction monitoring utilizing artificial intelligence offers an option to beleaguered fraud investigation units by alerting to potential CPCs, providing the means to act on debit fraud activity quickly. The discovery of a compromised CPC is one of the primary means of stopping debit card fraud quickly, before it can spread to a larger body of account holders.

Technology that analyzes account holder behavior and transactions to rapidly detect a CPC is the most efficient and powerful solution currently available.

To learn more about card fraud and the most effective ways of uncovering CPCs, you can download a free Debit Card Fraud Detection for Dummies e-book at

Jamie Rowsell

Jamie Rowsell

Jamie Rowsell ( is a researcher and writer at Verafin Inc., a provider of advanced, behavior-based fraud detection and anti-money laundering (FRAML™) software utilized by financial institutions ... Web: Details