Fraud continues to be the number one reason why a cardholder moves a card from top of wallet. And fraud isn’t cheap, costing the issuer the liability for the fraudulent charges plus the cost of reissue. Additionally, there is the potential of lost revenue from the card being moved from the No. 1 position in the cardholder’s wallet.
An effective approach to combat fraud is to put the cardholder in the middle of the transaction. In other words, enlist the cardholder to take ownership of monitoring card purchases and respond quickly to potential fraud.
A shining example of success implementing this strategy took place over the July 4 holiday weekend. FIS, CSCU’s processing partner and international provider of financial services technology and outsourcing services, rolled out a new product called, SecurLOCK Communicate. The product alerts credit and debit cardholders of potential fraud in real time via a two-way interactive text message (SMS), or a voice call, or an email.
Cardholders who have a mobile phone number on file with their issuer and had a suspicious transaction received a text message in under 30 seconds on average of the transaction being flagged by a neural network, asking the cardholder to validate the recent transactions, or to confirm the suspected transactions as fraud. A whopping 54% of the text messages were responded to in real-time, showing the cardholder appreciates this level of monitoring and control. This is even higher than the beta group’s 48% response rate — which was already better than expected.
Eliminates Embarrassing Card Blocks
The benefit of confirming the transaction as valid eliminates embarrassing and inconvenient card blocks. The benefit of confirming fraudulent activity immediately helps prevent further activity. It’s been proven that catching and reporting a fraudulent transaction within 30 seconds can prevent previously unrecoverable losses by 70%, by shutting down the counterfeit card immediately.
Users who did not respond to the text message, or who indicated the transaction may be fraudulent, received an automated phone call offering the option to speak to a live agent. An even better than expected 55% of these voice alerts were responded to, further decreasing fraudulent activity. And this was just in the first weekend of the product, with many cardholders not yet having seen communication about the new service.
Finally, cardholders who did not respond to text or voice, or did not have a reachable phone number, received an email, with links to respond to validate the transaction or indicate fraud. And despite all the spam and junk mail that floods most inboxes, 42% of the emails were responded to, up from an initial email response rate of 32%. This is especially phenomenal, given that the median click rate for a typical email campaign is 6.5%.
These numbers will only grow over time, as more cardholders learn from their issuers the importance of being in the middle of the transaction and the benefit of fighting fraud by reacting quickly.
Use This Member-Facing Message
We encourage all credit unions to incorporate this member-facing message on your statements, the credit union website, newsletters, and on-hold messaging, to name a few:
“New Fraud Protections Coming! To further protect you, you will begin receiving texts and/or emails asking you to confirm if suspicious purchases are valid or not. We will ONLY ask you to verify if you did make the purchase(s) or not. We will not ask for account or personal information. Keeping you protected is important to us and we are excited to offer these new enhanced fraud services to you!”
Dean Knudtson is senior portfolio consultant at CSCU.