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Combatting Debit Fraud in 2022: A Guide for Issuers


Card-not-present (CNP) transactions skyrocketed in 2021, driven by consumers’ desire to shop from anywhere and merchants’ desire to capitalize on the trend. Unfortunately, fraudsters are capitalizing on this growth, too.

Instead of being limited to traditional snail mail, fraudsters now have fast, easy access to identifying information whenever they want. Batched data sets – including card and Social Security numbers – are sold on the dark web to anyone who can pay, and phishing scams of every flavor are rampant.

This raft of new approaches has led to the enormous fraud losses that card issuers, merchants and acquirers incurred in 2020: $28.58 billion, according to the most recent figures from the Nilson Report – and this number is predicted to grow.

“Fraud is just harder to detect in the CNP space, and fraudsters are always going to take the path of least resistance,” said Jim Lerdal, Executive Vice President of Operations, PULSE. “So we expect the majority of fraud to continue to come down the CNP path.”

The good news is, with a layered approach that takes advantage of the fraud-detection tools available to them, it’s entirely possible for issuers of any size to minimize cardholder impact while mitigating fraud risk – and keep cardholders happy in the process.

A Multi-Pronged Approach by Issuers Is Key in the CNP Era

Issuers wanting to preserve the cardholder experience in the CNP era can take a few critical steps to lower fraud risk significantly – starting with raising the level of vigilance. Educating cardholders and staff is one part of that equation. The other is simplifying the fraud-monitoring process by using as many cutting-edge fraud detection services as possible:

“Combatting fraud, and avoiding unexpected – but significant – losses, requires being well-staffed and using any and all resources you can, whether through your own solutions, your processor or your network.”

Jim Lerdal, Executive Vice President of Operations, PULSE

Today’s fraud-monitoring tools are a vast improvement over the friction-heavy process caused by manual reviews, or by blocking a good customer and requiring that they call their issuer to get their card reactivated.

That’s why platforms like PULSE DebitProtect® are so valuable: They increasingly rely on artificial intelligence and machine-learning models that are trained to recognize individual cardholder spend patterns. When out-of-pattern activity is detected, many solutions automatically alert cardholders and issuers in near real-time so that swift action can be taken, fraud is blocked effectively and valid transactions are processed.

Partnering with PULSE to Prevent Fraud

For issuers, these crucial protections are already available. DebitProtect offers the latest in AI-based fraud detection and real-time fraud alerts, and is included free of charge for all issuers on the PULSE network. All cardholder transactions are automatically monitored and scored. To take advantage of DebitProtect’s alerting function – the real power of the solution – issuers need only sign a simple form, and onboarding can be completed within one day.

Here’s how DebitProtect works: If a network-wide fraud rule is triggered by a transaction, the issuer’s registered email addresses receive notification of a potentially fraudulent transaction almost instantly, after which the issuer can choose to notify the cardholder or block the transaction.

Having this information available improves issuers’ ability to reduce fraud significantly. In fact, in 2021, issuers using DebitProtect blocked 53% more fraud, saw a 42% increase in the value-detection rate and experienced a 23% reduction in false-positives, as compared to non-users.

Statistical proof that DebitProtect improves fraud experience of issuers

For an additional level of security, issuers can enroll in DebitProtect Authorization Blocking. This optional service uses predictive artificial intelligence and machine-learning transaction scoring, along with rule-based strategies, to give issuers near real-time alerting, real-time blocking and card auto-blocking.

In addition, each issuer is assigned a dedicated PULSE fraud analyst to help design a customized rules strategy appropriate for the institution’s size, risk tolerance and regional footprint – and to anticipate and respond to changing fraud events and patterns. The analyst is the issuer’s trusted resource and is available whenever a client has questions or concerns.

Further, DebitProtect Communicate is a cardholder-facing transaction alerting platform that integrates with DebitProtect Authorization Blocking. Communicate sends a notification on behalf of the issuer when a fraudulent transaction is suspected, asking cardholders to validate suspicious transactions immediately. This way, cardholders can attend to and close DebitProtect cases themselves – delivering a frictionless, efficient experience for all parties and protecting issuers against losses.

With defenses like these in their arsenal, issuers can significantly lower their risk of losing money or valuable customers to fraudsters. Partners like PULSE are poised to help them keep pace with changing payments technology – so they can give their cardholders the security and freedom to shop the way they want in 2022 and beyond.

Connect with us to talk to a PULSE representative today about upgrading your fraud protection.