By: David Ver Eecke, Fraud Product Strategy
When it comes to fraud prevention, much focus is placed on the importance of rule strategies, as well as identifying and blocking fraud trends before they impact your financial institution. Fraud fighters rely on the combination of risk scores and data elements to separate fraudulent activity from legitimate cardholder spend. No matter how carefully cultivated a fraud rule may be, there will always be impact to legitimate transactions. False positives are an important consideration for fighting fraud, in order to balance fraud savings with the cardholder experience.
However, while rule strategies and analysis are undeniably important to protecting your bank, they are only part of the puzzle. Even the best rule set strategy still requires cardholder intervention to determine whether a transaction was ultimately legitimate or fraudulent. This is when your customer becomes acutely aware of your bank’s fraud defenses – therefore, it is important to manage that confirmation process precisely and ensure that your cardholder has a positive experience.
How Can Financial Institutions Provide a Positive Fraud Management Experience?
It may be hard to imagine your customers having a positive experience when it comes to fraud. Many of your fraud cases will turn out to be legitimate transactions. However, even with a conservative false positive ratio of 4 to 1, that is still four cardholders impacted by a fraud alert for every fraudulent case identified – not to mention the feelings of stress and helplessness experienced if fraud has been identified.
On top of that is the rightful expectation your customers have that your card will work anywhere at any time, no matter if they have informed you of their travel intentions. Adding up all of these considerations can create a significant challenge for financial institutions and their fraud team. Thankfully, there is a way to create that positive experience for cardholders by introducing additional contact channels to your fraud alert program.
The Fraud Text Alert Solution
Providing cardholders the convenience to receive fraud alerts on their mobile device via text message, in addition to a call and email, allows them to receive notice of any suspicious activity in a timely manner, as well as interaction with your bank to quickly clear up those alerts or stop fraud from occurring any further. Not only do your customers appreciate the ability to receive fraud alerts via text to reply right away; they expect it.
Consider the following situation. A cardholder has had a long drive to visit family, they are close to their destination, but they need to stop for gas. As they pull up to the pump and make a payment with your bank card, the card has been declined. It’s getting late and now they’re wondering if anyone is available to help them determine why their card was declined. They know the money is in their account, so it must be a fraud alert. But they think, “I know that I’m traveling, but I’m not that far from home.”
Here is the point in which your bank has the ability to turn this all too common situation into a positive experience. Texting a fraud alert to the cardholder allows them to be notified of the suspicious transaction while they are still checking out. If it’s a legitimate transaction, they can simply reply that via text and retry their card to complete the purchase.
It’s this kind of convenient, instant service that keeps your card top of wallet and lets your cardholders know that your bank is keeping their accounts secure. Adding a texting program to your fraud alerts notification system is a powerful tool to ensure your organization can meet and exceed expectations. Even with the best fraud rule set, you will always need the confirmation from cardholders, which makes fraud text alerts a critical solution.
David Ver Eecke is a strategic product manager. When he isn’t working on products to increase payment security for financial institutions and wage war against fraudsters, he finds time to write about topics on risk and fraud.
